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Chinese Saving Dynamics: The Impact of GDP Growth and the Dependent Share

Posted April 19, 2012 | Categories: UHERO Working Papers, Bonham, Carl

 

China’s national saving rate rose rapidly in the 2000s after declining through the late 1990s. These dynamics are not explained by precautionary motives, the institutional distribution of income, or reform related processes in general. Rather, we find a compelling explanation lies with GDP growth fluctuations and movement in the dependent share in population. We estimate a vector autoregressive model for the period 1978-2008, then generate in-sample simulations that successfully replicate the 2000s run-up in the saving rate. Our out of sample forecasts show the saving rate dropping in the 2010s as the dependency share falls and GDP growth moderates.


Published: Bonham, C. and Wiemer, C. "Chinese saving dynamics: the impact of GDP growth and the dependent share,"  Oxford Economic Papers, published online April 2012, doi:10.1093/oep/gps 020.


Working Paper VersionDATA FILE (XLS)


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