Why Aren't Savings Rates in Latin America Procyclical?
28 Pages Posted: 7 May 1998 Last revised: 7 May 2000
Date Written: April 1998
We document a striking empirical regularity: Latin American savings rates are as a rule substantially less procyclical than for OECD countries and in some cases are actually countercyclical. We build a non-representative agent intertemporal macroeconomic model that rationalizes this phenomenon as the equilibrium outcome of interaction between multiple groups that have common access to aggregate income. We conclude by suggesting that institutional reform may hold the key to improving the cyclical behavior of savings in Latin America.
Suggested Citation: Suggested Citation