A Sexually Unbalanced Model of Current Account Imbalances
63 Pages Posted: 4 Jun 2010 Last revised: 22 Mar 2023
Date Written: May 2010
Abstract
Large savings and current account surpluses by China and other countries are said to be a contributor to the global current account imbalances and possibly to the recent global financial crisis. This paper proposes a theory of excess savings based on a major, albeit insufficiently recognized by macroeconomists, transformation in many of these societies, namely, a steady increase in the surplus of men relative to women. We construct an OLG model with two sexes and a desire to marry. We show conditions under which an intensified competition in the marriage market can induce men to raise their savings rate, and produce a rise in the aggregate savings and current account surplus. This effect is economically significant if the biological desire to have a partner of the opposite sex is strong. A calibration of the model suggests that this factor could generate economically significant current account responses, or more than 1/2 of the actual current account imbalances observed in the data.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
What Drives Private Saving Around the World?
By Norman Loayza, Klaus Schmidt-hebbel, ...
-
Investment and Saving in China
By Louis Kuijs
-
Why are Saving Rates of Urban Households in China Rising?
By Marcos Chamon and Eswar S. Prasad
-
Why are Saving Rates of Urban Households in China Rising?
By Marcos Chamon and Eswar S. Prasad
-
Why are Saving Rates of Urban Households in China Rising?
By Marcos Chamon and Eswar S. Prasad
-
How Will China's Saving-Investment Balance Evolve?
By Louis Kuijs
-
The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data
By Charles Yuji Horioka and Junmin Wan
-
The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data
By Charles Yuji Horioka and Junmin Wan