Political uncertainty and household savings

Despite macroeconomic evidence pointing to a negative aggregate consumption response due to political uncertainty, few papers have used microeconomic panel data to analyze how households adjust their consumption after an uncertainty shock. We study household savings and expenditure adjustment from an unexpected, large-scale and rapidly evolving political shock that occurred largely in May 1989 in Beijing, China. Using monthly micro-panel data, we present evidence that a surge in political uncertainty resulted in significant temporary increases in savings among urban households in China. Households responded mainly by reducing semi-durable expenditure and frequency of major durable adjustment. The uncertainty effect is more pronounced among older, wealthier, and more socially advantaged households. We interpret our findings using existing models of precautionary behavior. By focusing on time variation in uncertainty, our identification strategy avoids many of the potential problems in empirical studies of precautionary savings such as self-selection and life-cycle effects.     

对我国居民储蓄行为的再思考

居民储蓄持续增长早已成为我国重要的经济现象之一。其与我国诸多宏观经济因素之间存在密切联系，也是支持经济快速增长的重要因素。本文试从我国居民储蓄的现状及成因入手，阐述我国储蓄行为的变化倾向，以利国家采取相应的宏观调控政策。     

Determinants of private savings behaviour in Turkey

This study investigates the effects on private saving rates of a number of policy and non-policy variables. The analysis covers the period 1968–1994. The empirical private saving model for Turkey is estimated. The findings support the hypothesis that private saving rates have strong inertia. The evidence indicates that government saving does not tend to crowd out private savings and the Ricardian equivalence does not hold strictly. Income level has a positive impact on private saving rate, and growth rate of income is not statistically significant. From a policy point of view, financial depth and development measures in Turkey suggest that countries with deeper financial systems tend to have higher private saving rates. Private credit and real interest rates try to capture the severity of the borrowing constraints and the degree of financial repression for Turkey. Moreover, the negative impact of life expectancy rate lends support to the life-cycle hypothesis. The precautionary motive for saving is supported by the findings that inflation captures the degree of macroeconomic volatility and has a positive impact on private saving in Turkey.     

Cost savings in unit-based pricing of household waste: The case of The Netherlands

We estimate the effects of four unit-based pricing systems on waste collected in Dutch municipalities. Unit-based pricing is shown to be effective in reducing unsorted and compostable waste and in stimulating recyclable waste. If the estimations are corrected for differences in environmental activism between municipalities the effects are still large but significantly lower. The bag- and weight-based systems perform equally and far better compared with the frequency- and volume-based systems. This is interesting, as administrative costs are significantly lower for the bag-based system. Finally, unit-based pricing has no effect on the amounts of waste collected in surrounding municipalities.     

Do private pensions increase national savings?

This paper discusses how private pension programs differ from public social security in their likely impact on aggregate saving. Although private pensions are likely to reduce direct saving by employees, this should be offset by the combination of companies' partial funding and the shareholders response to unfunded liabilities. In contrast to several earlier empirical studies that implied that social security does depress national saving, the current time series evidence suggests that the growth of private pensions has not had an adverse effect on saving and may have increased saving by a small amount.     

The effect of household characteristics on saving behaviour and the theory of savings in Japan

The purpose of this paper is to estimate the household saving functions based on cross-section data which contain fruitful informations of individual observations. The paper also attempts to test various theories of saving behaviours empirically such as life-cycle saving hypothesis, or permanent income hypothesis, or several other theories. Since the data contain several useful variables which have not been used previously, particular attention is paid to the influence of those household characteristics on saving behaviour.     

A structural dynamic microsimulation model of household savings and labour supply

A structural model of the household is described that represents current best-practice in the analysis of savings and labour supply responses to the policy environment. Care has been taken in specifying the model so that it represents an appropriate basis for the analysis of incentive effects to policy change, and for exploring the empirical support for alternative structural assumptions. Matching the model to survey data for the UK reveals some interesting puzzles in relation to the timing of retirement.     

Motives for household private transfers in Burkina Faso

Resource transfers among households have received considerable interest among economists in recent years. Two of the main reasons for the surge of interest in household transfers are the information on human nature conveyed by transfer behavior and the implication on income redistribution policy that private transfer might have. Empirical studies, however, provide mixed results on transfer behavior. This is because previous inquiries were confronted with several estimation issues and have focused on data from developed countries where private transfers are already small. This paper contributes to the literature on transfer behavior by using a multifaceted econometric approach to examine the motives of household transfers in Burkina, a low-income country with a well-documented tradition of gift exchanges. The findings suggest that risk sharing is not central to transfers. Altruistic transfers are apparent for the middle income class, but not at low income level. The evidence implies that crowding out may be minimal at low income level, suggesting that public transfers targeting poor households may be effective.     

On the determinants of household debt maturity choice

This article jointly analyses a behavioural and a cultural concept to explain household debt portfolio choice. The behavioural approach explores the role of time preferences on household debt maturity in a theoretical model and a numerical analysis. We derive a positive relationship between the long-term discount factor δ and the optimal maturity of household loans. The cultural approach examines whether national culture is a reasonable predictor for household debt maturity. We show that culture is an important factor for households’ borrowing decisions and has even more predictive power than time preferences. Countries with higher scores on the Hofstede dimension of long-term orientation tend to have shorter household debt maturity. Time preferences incur a primarily mediating role, because the effect of national culture on the borrowing decision is reduced, as the long-term discount factor δ increases.     

The determinants of the demand for private health insurance under Medicare

Since the introduction of Medicare in 1984, the proportion of the Australian population with private health insurance has declined considerably. Insurance for health care consumption is compulsory for the public health sector but optional for the private health sector. In this paper, we explore a number of important issues in the demand for private health insurance in Australia. The socio-economic variables which influence demand are examined using a binary logit model. A number of simulations are performed to highlight the influence and relative importance of various characteristics such as age, income, health status and geographical location on demand. A number of important policy issues in the private health insurance market are highlighted. First, evidence is provided of adverse selection in the private health insurance pool, second, the notion of the wealthy uninsured is refuted, and finally it is confirmed that there are significant interstate differences in the demand for private health insurance.     

The drivers of household indebtedness reconsidered: An empirical evaluation of competing arguments on the macroeconomic determinants of household indebtedness in OECD countries

Abstract

Household debt is at a record high in most Organisation for Economic Co-operation and Development (OECD) countries and it played a crucial role in the recent financial crisis. Several arguments on the macroeconomic drivers of household debt have been put forward, and most have been empirically tested, albeit in isolation of each other. This article empirically tests 7 competing hypotheses on the macroeconomic determinants of household indebtedness together in one econometric study. Existing arguments suggest that residential house prices, upward movements in the prices of assets demanded by households, the income share of the top 1%, falling wages, the rolling back of the welfare state, the age structure of the population, and the short-term interest rate drive household indebtedness. We formulate these arguments as hypotheses and test them for a panel of 13 OECD countries over the period 1993–2011 using error correction models. We also investigate whether effects differ in boom and bust phases of the debt and house price cycles. The results show that the most robust macroeconomic determinant of household debt is real residential house prices, and that the phase of the debt and house price cycles plays a role in household debt accumulation.     

The vanishing savings motive

The overlapping generations model with life-time uncertainty is capable of generating unfamiliar, nonmonotonic adjustment phenomena that are attributed to a transitory savings motive. Slowly falling (increasing) wages create transitory savings (dis-)incentives which vanish in the long run when wage profiles become stationary again. Such a transitory savings component comes on top of a base component created by the permanently operating long-run savings incentives, and it easily gives rise to overshooting adjustment. Assets and consumption may even move first in a direction opposite to the implied long-run changes.     

In the wake of tsunami: Lessons learned from the household decision to replant mangroves in Thailand

The Indian Ocean tsunami has increased interest in replanting mangroves as natural storm barriers. This paper analyzes the household decision to replant mangroves in four case study villages in Thailand in line with existing studies on the voluntary contribution to step-level public goods and the decision by adult members of a household to devote some labor to an outside activity. The null hypothesis that dependency on mangrove-based income has no influence on participation in replanting is rejected. Awareness of community conservation efforts and of the environmental impacts of shrimp farms also motivates participation. Allocation of male and female labors to replanting is also found to be jointly determined.     

The role of domestic savings in outward-oriented growth strategies

This paper presents a theory of technological catching-up in which local savings plays a key complementary role to international finance and foreign technology. Until now, the literature has primarily emphasized “outward orientation” as the key ingredient of catching-up success. It has indeed been argued that countries which have relied intensively on foreign technologies, either through capital goods imports or foreign direct investment inflows, have been successful while countries which have opted for inward-oriented growth strategy relying on domestic investment and import-substitution strategies have been unsuccessful. In this paper, we develop a sequential model of industrialization in which domestic savings is key to the success of outward-oriented growth strategies. Indeed, internal finance helps to overcome time-to-adjustment constraints which occur in the early phases of the catching-up process when both advanced foreign technologies and backward domestic ones co-exist. In this model, external finance, though international borrowing, and domestic savings are complementary, not substitutable, in the course of technological catching-up.

The genuine savings criterion and the value of population

Summary. In any dynamic model of the economy with changing population, the latter should properly be one of the state variables of the system. It enters both in the maximand, at least under total utilitarianism, and into the production function in one way or another. If population growth is exponential and constant returns prevails, then a simple transformation to per capita variables can be used to eliminate one state variable, but this ceases to be true if growth is not exponential, as it obviously is not and cannot be. If the growth of population is exogenous, then introducing it into the system does not affect the optimal policy. However, if one asks whether the system is sustainable, in the sense of at least maintaining total welfare (integral of discounted utilities), then the criterion is that that the value of the rates of change of the state variables is non-negative, so that the shadow price of population becomes relevant. In this paper, we derive explicit formulas in a simple model, showing that the rate of growth of per capita capital is not the correct formula but must have another terms added to it. We also study the question under an alternative criterion of long-run average utilitarianism. Received: June 1, 2002; revised version: September 27, 2002 RID="*" ID="*"Research support was provided by the William and Flora Hewlett Foundation. An earlier version of this paper was presented at a celebration of Mordecai Kurz's 66th birthday at Stanford University, 1–3 August 2002. Correspondence to: K.J. Arrow     

民族国家的历史时间——简析当代泰国的节日体系

节日是一个在当下唤起过去然后回到当下的过程,节日的设置通常反映了民族国家在当下叙说过去的立场.本文通过对当代泰国节日体系的形成过程和表现形式的分析,展现了一个现代民族国家的连续的历史时间观.在这种时间观中,历史与现实、国家与社会达成了相互融合的关系.     

The role of sources of income and investment opportunities in rural savings

This paper investigates the effect that sources of income and investment opportunities have on the savings behavior of farm households in rural India. The panel nature of the data (agricultural years 1968–1969, 1969–1970 and 1970–1971) allows for the identification of the permanent and transitory components of a household's income. It is shown that income variability (rather than investment opportunities) can account for observed differences in the propensity to save out of different sources (agricultural/non-agricultural). A direct test of the effect of investment opportunities on savings is offered in the second part of the paper. It is observed that capital market conditions have an important effect on this relationship; poor households save more, and rich households save less, in response to an increase in investment opportunities.     

Children and savings in less developed countries

"A commonly cited motive for childbearing in LDCs is the support in old age provided by one's children. Alternative means of retirement support become available as a country develops. This paper presents a simple two period model in which financial institutions are allowed to substitute for children in the provision of this service. The 'quality' of financial institutions is given an operational definition and the hypotheses of the model are tested on a cross-section sample of countries."     

Time preference and savings behaviour

A number of studies have examined various determinants of savings rate. This article contributes to this literature by empirically testing whether the time preference (discounting behaviour) is another important determinant of savings rate. To this end, we estimate the hyperbolic Euler equation using the generalized method of moments (GMM) to examine whether the short-run discount factor can account for savings behaviour. The empirical results show that people exhibit short-run patience (impatience) when savings rate increases (decreases), which is in line with the theoretical prediction. This result implies that the time preference also plays an important role in determining savings behaviour. Various sets of instruments and different sample periods do not reverse the main finding.