Transitional dynamics of the saving rate and economic growth

Markus Brueckner, Tomoo Kikuchi*, George Vachadze

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

We estimate the relationship between GDP per capita growth and the growth rate of the national saving rate using a panel of 130 countries over the period 1960-2017. We find that GDP per capita growth increases (decreases) the growth rate of the national saving rate in poor countries (rich countries), and a higher credit-to-GDP ratio decreases the national saving rate as well as the income elasticity of the national saving rate. We develop a model with a credit constraint to explain the growth-saving relationship by the saving behavior of entrepreneurs at both the intensive and extensive margins. We further present supporting evidence for our theoretical findings by utilizing cross-country time series data of the number of new businesses registered and the corporate saving rate.

Original languageEnglish
JournalMacroeconomic Dynamics
DOIs
Publication statusAccepted/In press - 2021

Keywords

  • Economic growth
  • credit constraints
  • entrepreneurs
  • saving rate

ASJC Scopus subject areas

  • Economics and Econometrics

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