Global imbalances and household savings
The role of wealth
Bibliographic Data
| ID | 12006586 |
|---|---|
| Authors | Simone Salotti (0000-0003-1898-6683, Dipartimento di Economia Politica, Università di Siena, Piazza San Francesco, 7, 53100 Siena, Italy, corresponding author) |
| Year | 2009 |
| Volume | 47 |
| Issue | 1 |
| Pages | 21-44 |
| Publication date | 2009-12-30 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Social Science Journal (JOURNAL) |
| Journal identifiers | ISSN: 0362-3319 • E-ISSN: 1873-5355 |
| Publisher | Taylor & Francis (PUBLISHER • GB) |
| DOI | 10.1016/j.soscij.2009.07.004 |
| OpenAlex | W2126712352 |
| Language | EN |
| Citations received | 2 |
| References cited | 19 |
Many claim that fluctuations in U.S. private savings help to create and to sustain global imbalances because of their influence on the current account deficit. To test this claim, this paper investigates the determinants of aggregate household savings using a panel of 18 developed countries for the period 1980–2005. We weave two strands of literature: the first strand from consumer theory, considering specifically the ‘wealth effect’, the second strand from aggregate private savings theory. The original contribution of this paper derives from the main explanatory variables of the household savings function: two measures of household wealth, the first a financial variable and the second a variable for tangible/housing stock. The salience of these variables has not been tested before. The model is then enriched with variables taken from the private savings literature. To find the best technique to estimate the long run savings function, unit root and cointegration tests are carried out, from which evidence of a cointegrating relationship is found. The group means FMOLS is used to estimate the model. The empirical evidence suggests effects consistent with theory: an increase in wealth negatively affects household savings. Furthermore, when important explanatory variables, such as government savings and population dependency ratios, are included in the model, tangible wealth becomes the only kind of wealth to (weakly and negatively) influence household savings in developed countries. In the U.S. however, wealth does not seem to affect household savings negatively, it seems instead that government savings and population changes better explain the decline of savings during the past two decades. This finding provides additional evidence on the issue of global imbalances, and suggests that the recent booms of the stock and the real estate markets should not be blamed for the decline in U.S. household and private savings
Cointegration · Current account · Debt · Demographic economics · Dependency ratio · Econometrics · Economics · Macroeconomics · Monetary economics · Population · Savings account · Stock (firearms · Unit root · Variable (mathematics · Wealth effect · Financial Literacy, Pension, Retirement Analysis · Global Health Care Issues · Housing Market and Economics
Testing for stationarity in heterogeneous panel data
Fully modified OLS for heterogeneous cointegrated panels
On the estimation and inference of a cointegrated regression in panel data
Unit root tests in panel data
Some Tests of Specification for Panel Data
Testing for unit roots in heterogeneous panels
Pooled Mean Group Estimation of Dynamic Heterogeneous Panels
Panel Cointegration
Spurious regression and residual-based tests for cointegration in panel data
What Drives Private Saving Across the World
The Decline in Household Saving and the Wealth Effect
Private saving determinants in European countries
Stock Market Wealth and Consumption
| Citations per year | 0.17 |
|---|---|
| Citation span | 2014 - 2020 (7) |
| Highly cited | No |