Neglected Heterogeneity and Dynamics in Cross-Country Savings Regressions

37 Pages Posted: 27 Apr 2001

See all articles by Nadeem Ul Haque

Nadeem Ul Haque

Pakistan Institute of Development Economics

M. Hashem Pesaran

University of Southern California - Department of Economics; University of Cambridge - Trinity College (Cambridge)

Sunil Sharma

George Washington University - Elliott School of International Affairs

Date Written: September 1999

Abstract

This paper examines the extent to which conclusions of cross-country studies of private savings are robust to allowing for the possible heterogeneity of savings behavior across countries and the inclusion of dynamics. It shows that neglecting heterogeneity and dynamics can lead to misleading inferences about the key determinants of savings behavior. The results indicate that among the many variables considered in the literature only the fiscal variables--the general government surplus as a proportion of GDP and the ratio of government consumption to GDP--are important determinants of private savings rates in the industrial countries in the post-World War II period.

Keywords: Saving Behavior, OECD, Cross-Country Studies, Panel Data Models, Slope Heterogeneity, Dynamics, Ricardian Effect

JEL Classification: C23, E21

Suggested Citation

Ul Haque, Nadeem and Pesaran, M. Hashem and Sharma, Sunil, Neglected Heterogeneity and Dynamics in Cross-Country Savings Regressions (September 1999). IMF Working Paper No. 99/128, Available at SSRN: https://ssrn.com/abstract=267794 or http://dx.doi.org/10.2139/ssrn.267794

Nadeem Ul Haque

Pakistan Institute of Development Economics ( email )

Quaid-i-Azam University Campus, P.O. Box. 1091
Islamabad, Capital 44000
Pakistan
+92-51-9217879 (Phone)
+92-51-9210886 (Fax)

HOME PAGE: http://www.saneinetwork.net/structure/st_comm/NadeemUlHaque.asp

M. Hashem Pesaran

University of Southern California - Department of Economics

3620 South Vermont Ave. Kaprielian (KAP) Hall 300
Los Angeles, CA 90089
United States

University of Cambridge - Trinity College (Cambridge) ( email )

United Kingdom

Sunil Sharma (Contact Author)

George Washington University - Elliott School of International Affairs ( email )

Institute for International Economic Policy
1957 E Street NW
Washington, DC 20052
United States

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