Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87404
Authors: 
Adema, Yvonne
Pozzi, Lorenzo
Year of Publication: 
2012
Series/Report no.: 
Tinbergen Institute Discussion Paper 12-144/VI
Abstract: 
We investigate the cyclicality of the private savings to GDP ratio for a panel of 19 OECD countries over the period 1971-2009. We find robust evidence that the private savings ratio is countercyclical. Three theories unambiguously predict a higher private savings ratio during recessions: a Ricardian offset effect, the presence of credit constraints, and precautionary savings. We find evidence only for the latter theory. Our estimations take into account a large number of econometric complications: persistence in the savings ratio, endogeneity of the regressors, cross-country parameter heterogeneity, cross-sectional dependence, stationarity issues, omitted variables, and instrument strength.
Subjects: 
Private Savings
Business Cycles
Ricardian offset
Credit Constraints
Precautionary Savings
Dynamic Panel
Cross-Sectional Dependence
JEL: 
C23
E21
E32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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