Why are Saving Rates of Urban Households in China Rising?
By M. Chamon, Eswar S. Prasad. Social Science Research Network, 2008
676 citations recorded by the source corpus.
From 1995 to 2005, the average urban household saving rate in China rose by 8 percentage points, to about one quarter of disposable income. We use household-level data to explain why households are postponing consumption despite rapid income growth. Tracing cohorts over time indicates a virtual absence of consumption smoothing over the life cycle. The age profile of savings has an unusual U-shaped pattern, with saving rates being the highest among the youngest and oldest households. We find that financial underdevelopment, as reflected in constraints on borrowing and low returns on financial assets, partially accounts for this pattern. Moreover, overall saving rates have increased across all demographic groups. We argue that this can be explained by the rising private burden of expenditures on housing, education, and health care.
Subfields: Accounting, Economics and Econometrics, General Health Professions
View Paper: https://www.semanticscholar.org/paper/2d1f80186eb6ed605d9a86d0ec157a86c4d05184
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Citations in the corpus
- Credit constraints and growth in a global economy (2012, neutral): “j=0 ej,tL i t−j 1−α = AtL̄ i t(k i t) , (20)”
- Capital Account Policies and the Real Exchange Rate (2012, neutral): “Note that the resistance to appreciation is assumed to last a finite time t, after which there is free capital mobility and Ricardian equivalence applies.”
- Demographic Patterns and Household Saving in China (2015, neutral): “Instead, urban Chinese accelerated their saving during this time period (Chamon and Prasad (2010)).”
- The impact of digital finance on household consumption: Evidence from China (2020, positive): “uncertainty of residents for their future, thus strengthening the precautionary saving motivation and reducing resident consumption based on the theory of precautionary saving (Meng, 2003; Chamon and Prasad, 2010); the fourth explanation assumes that income inequality is an”
- Income inequality as a cause of the Great Recession?: A survey of current debates (2012, methodology): “Following Chamon and Prasad (2010), most promising in explaining high and rising household saving in recent years are the rapid privatisation of the housing stock (combined with very limited availability of household credit), and the rising private burden of education and health expenditures, togeth”
- The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China (2009, positive): “This explanation does not appear to be consistent with the profile of savings at the household level (Chamon and Prasad 2010).”
- Rebalancing Growth in Asia (2009, methodology): “I complement the macroeconomic data with household-level data from some of my earlier work on China (joint with Marcos Chamon).”
- The chinese saving rate: Long-term care risks, family insurance, and demographics (2018, neutral): “Vj(x) = max cs,cf ,a′ [nu(cs) + du(cf )] + βE[Ṽj+1(x ′)] (5)”
- Public pension and household saving: Evidence from urban China (2011, background): “Using household level data for 1989–2006, Chamon et al. (2010) found that rising income uncertainty can explain the rising savings rates among younger households.”