Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison

38 Pages Posted: 15 Feb 2006

See all articles by Masao Ogaki

Masao Ogaki

Ohio State University

Jonathan D. Ostry

International Monetary Fund (IMF)

Carmen M. Reinhart

Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER)

Date Written: January 1995

Abstract

The impact of changes in real interest rates on saving and growth is a central issue in development economics. According to one familiar view, a financial liberalization program which increases real interest rates should encourage saving, thereby boosting investment and growth. While such liberalizations have indeed typically succeeded in raising real interest rates, their impact on private saving has been mixed. This paper uses macroeconomic data for a sample of countries with diverse income levels to estimate a model in which the intertemporal elasticity of substitution varies with the level of wealth. The estimated parameters are then used to calculate, in the context of a simple endogenous growth model, the responsiveness of saving to real interest rate changes for countries at differing stages of development.

JEL Classification: E21, F41, F43, O11, O16, O57

Suggested Citation

Ogaki, Masao and Ostry, Jonathan D. and Reinhart, Carmen M., Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison (January 1995). IMF Working Paper, Vol. , pp. 1-38, 1995. Available at SSRN: https://ssrn.com/abstract=883153

Masao Ogaki (Contact Author)

Ohio State University ( email )

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614-292-5842 (Phone)
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Jonathan D. Ostry

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Carmen M. Reinhart

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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