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.     

Energy transition under mineral constraints and recycling: A low-carbon supply peak

What are the implications of primary mineral constraints for the energy transition? Low-carbon energy production uses green capital, which requires primary minerals. We build on the seminal framework for the transition from a dirty to a clean energy in Golosov et al. (2014) to incorporate the role played by primary minerals and their potential recycling. We characterize the optimal paths of the energy transition under various mineral constraint scenarios. Mineral constraints limit the development of green energy in the long run: Low-carbon energy production eventually reaches a plateau. We run our simulations using copper as the limiting mineral and we allow for its full recycling. Even in the limiting case of a 100% recycling rate, after five to six decades green energy production is 50% lower than in the scenario with unlimited primary copper, and after 30 decades, GDP is 3–8% lower. In extension scenarios, we confirm that a longer life duration of green capital delays copper extraction and the green energy peak, whereas reduced recycling caps moves the peak in green energy production forward.     

A revalidation of the savings–growth nexus in Pakistan

The aim of this study is to understand the relationship between savings and economic growth in Pakistan over the period 1971–2011. The cointegration and the Granger causality tests are adopted to examine the relationship between the variables. The results confirm the existence of long-run equilibrium among the variables of interest. Meanwhile, savings have positively affected economic growth in both the short run and long run. The Granger results also show that savings Granger-cause economic growth. Based upon these findings, we confirm that savings is a catalyst of growth for the Pakistani economy. Additionally, our results seem more likely to support the capital fundamentalists because the long run estimation as well as the Granger causality results also indicates that savings growth can effectively spur economic growth in Pakistan.     

On the Dynamics of Recycling and Natural Resources

We study the dynamic impact of recycling through its effect on the production set of the economy and its relationship with natural resources. The contribution of renewable and recyclable resources for sustainability is studied. Although in the short run recycling may alleviate resource scarcity, in the long run it is not enough to compensate for the exhaustibility of non-renewable resources and the possibility of obtaining non-decreasing output paths crucially depends on the extent to which production rests on renewable resources. Furthermore, recycling interacts with natural resource growth, surprisingly not always favoring sustainability. The Production and Recycling Function is a generalization of the traditional production function, providing an integrated view of regular production and recycling and representing the production set of the economy when a recycling technology is available.     

The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

In this study, we examine choices in voluntary superannuation contributions by Australian income earners. In particular, we focus on salary sacrifice contributions, which could attract a tax benefit of up to 30 percentage points. This study aims to evaluate how effective tax incentives are in stimulating salary sacrifice participation. Using a regression discontinuity framework, we measure the response of individuals to different levels of tax concessions on salary sacrifice contributions. Results indicate that current tax incentives have a limited effect, if any, on the decision to make salary sacrifice arrangements. This result is consistent with more recent empirical research from the Northern Hemisphere. It is likely that the lack of response is due to the complexity of the incentive schemes in Australia and competing vehicles for long‐term savings.     

The relationship ageing of the population and saving in an unemployment context: Empirical evidence using an autoregressive distributed lag bounds testing approach

In this article, we emphasised that ageing population does not systematically depress savings by drawing attention to the factors that may distort that prediction of the life‐cycle hypothesis (LCH). To demonstrate it, we used two indicators for ageing: the total and aged dependency ratios and we looked at the economic context influence on national saving evolution through considering the labour market imbalance interference. By applying the autoregressive distributed lag approach, with Tunisian data during 1970–2018, a dynamic long‐run relationship between ageing and national saving is found, although it seemed to be sensitive to the used ageing indicator and the economic context. Indeed, the LCH is proved only by the total dependence ratio whereas the aged dependence ratio puts a significant long‐run upward pressure on saving. Further, in a context of unemployment without any benefit scheme, the LCH prediction cannot be endorsed by the two indicators. Hence, the social and economic conditions limit the LCH scope, bearing out that elderly not depress systematically savings. Therefore, to sustain saving major economic and financial reforms are needed, as to postpone the retirement age, to move from pay‐as‐you‐go system towards funded pension system, to promote life insurance and to diversify the long‐run savings products.     

Neo-Kaleckian and Sraffian Controversies on the Theory of Accumulation

Abstract

Non-orthodox economists generally share the Keynesian Hypothesis of the independence of investment from capacity savings, in the long run no less than in the short run. This hypothesis marks an essential point of difference from neoclassical theory. Keynes showed that within the limits of the existing capacity utilisation, investment determines savings rather than the other way around. How best to extend this conclusion to the long run is the object of the current paper. The paper assesses the controversy on demand-led growth that has taken place since the mid-1980s between neo-Kaleckian and Sraffian authors. The Sraffian front may be divided into a first and a second Sraffian position, the latter being the Sraffian supermultiplier approach. I shall argue that this second approach is the most promising framework for analysing economic growth.     

Pension reforms and saving gains in the United Kingdom

The empirical validity of the effect of pension reforms on domestic savings in the UK has been investigated using an Auto‐regressive Distributed Lag (ARDL) model capable of testing for the existence of a long‐run relationship regardless of whether the underlying time series are individually I(1) or I(0). The total savings response to change in pension savings is positive and significant, but an increase in occupational pension saving appears offset by a decrease in other forms of saving. This paper concludes that there is no firm evidence that aggregate savings increase considerably because of privately funded pension schemes.     

North-south trade: Export-led Growth with Abundant Labour

A North-South model is developed in which the South is represented as a neo-classical dual economy. Conditions are imposed which make temporary equilibrium unique and Walrasian stable and long run balanced growth paths globally asymptotically stable. In the short run an expansion of Northern demand for Southern products always improves the terms of trade. In the long run, however, an increase in the growth rate of Northern demand can turn the terms of trade against the South, reduce real wages and lower living standards.     

Do the Rich Save More? Evidence from Canada

This paper provides new evidence on the long‐standing question of whether more affluent households save a larger fraction of their income. The major difficulty in empirically assessing the relationship between incomes and saving rates is to construct a credible proxy for long‐run income—purged of transitory fluctuations and measurement error. The Canadian Family Expenditure Survey provides us with both unusually good data on savings rates and potential predictors with which we can construct reliable long‐run income proxies. Our empirical analysis suggests that the estimated relationship between saving rates and long‐run incomes is sensitive to the predictor used to proxy long‐run income. Nevertheless, our preferred estimates indicate that, except for poorest households (who simply do not save), saving rates do not differ substantially across predicted long‐run income groups.     

金融资产与实物资产对城镇居民消费影响的差异性研究

本文在相关资料基础上,对我国城镇居民持有金融资产与实物资产进行了重新核算,并采用ARDL-UECM模型计量分析了长短期内金融资产、实物资产对消费影响的差异性。结果表明:金融资产长期内对消费支出存在较弱的抑制作用,短期内存在较弱的促进作用;而实物资产长期内对消费存在有限的促进作用,短期内对消费存在较强的促进作用。产生这种差异的原因主要是:超额比重预防性储蓄导致金融资产对居民消费产生长期扭曲,以及过高自有住房率在房价攀升时只能提高短期边际消费倾向,长期则有限。现阶段只有降低超额比重预防性储蓄及抑制过高的房价才能进一步提高城镇居民的资产财富效应。     

OPTIMAL GROWTH, GENUINE SAVINGS AND LONG-RUN DYNAMICS

Green accounting theories have shown that negative genuine savings at some point in time imply unsustainability. Consequently, recent studies advocate the use of the genuine savings measure for empirical testing: a negative index implies that sustainability be rejected. However, this criterion cannot ascertain sustainability, because positive current genuine savings do not rule out genuine dissaving in the future. This paper derives a one‐to‐one relationship between the sign of long‐run genuine savings and the limiting condition for sustained utility in the capital‐resource growth model, assuming technical progress and resource renewability. This result suggests to extend the genuine saving method to include a test of the limiting condition: if this condition is empirically rejected, positive current genuine savings are delivering a false message.     

Evaluating Unit-Based Pricing of Residential Solid Waste: A Panel Data Analysis

Municipalities introduced unit-based pricing (UBP) with the aim of achieving a decrease in household waste generation and for the replacement of unsorted waste with recycling. Although many studies have shown that UBP has a short-run effect on recycling, few works have tackled the long-run effect on waste generation and recycling. By using panel data for 665 Japanese cities over 8 years, we examine the long-run effect of UBP on waste generation and recycling. The estimation results in waste generation suggest that there is a rebound effect, though a small one. We confirm that the effect of UBP on recycling sustains for the long run. We also find that the short- and long-run responses to an economic incentive for recycling activities differ with income groups. Recycling among the high-income group has not been promoted by implementation of UBP, but people in that group are willing to participate in recycling without an economic incentive. In contrast, recycling activity within the low-income group is strongly motivated by UBP for many years.     

Saving less when there is more foreign lending? Foreign debt and savings in developing countries

Although literature has given considerable attention to the effects of foreign debt on growth, we still know little about its effects on the internal potential for capital formation. Literature suggests a number of channels through which the availability of foreign financing could affect domestic savings. We test empirically this relationship using data for Sub‐Saharan Africa and Latin America and the Caribbean over 1975–2004. Controlling for endogeneity, we find that foreign debt adversely influences domestic savings especially in the long run. The results are not susceptible to the choice of countries, although few outliers should be noted.     

TAXES, GROWTH AND THE CURRENT ACCOUNT TICK-CURVE EFFECT

This paper examines the dynamic and long run effects of a shift from income taxes to consumption taxes in a growing small open economy. We introduce a government sector that maintains a balanced budget and expenditure at a constant proportion of domestic income to a small open economy Swan-Solow model. Our framework provides a previously unidentified dynamic effect that is robust to endogenising the savings rate. Lowering the income tax rate promotes economic growth and has a tick-curve effect on the current account balance, characterised by instantaneous deterioration, a period of recovery and gradual convergence to an improved position in the long run.     

Lobbying, the Composition of Government Expenditures, and the Politics of Fiscal Policy

This paper constructs a one sector growth model to examine the impact of political lobbying on the formation of fiscal policy. The model predicts that lobbying can induce endogenous regime switches, development traps, and a sub-optimal allocation of government expenditures between productive and unproductive ends, leading to long run income losses in the economy. A calibrated version of the model is used to generate estimates of the dynamic social costs of lobbying by estimating the optimal savings rates necessary to induce balanced growth in the economy. Finally, the model predicts that lobbying may influence the growth of government.     

Transfers in a North-South Growth Model

The possibility of immiserizing growth is explored in a non-Neoclassical North-South model having formal similarities to Goodwin's growth-cycle model. Because of the the 'engine-of-growth' property of the Northern economy, a redistribution in favour of the South is beneficial to that region only in the short run but will harm both regions in the long run.     

Environmental quality,the macroeconomy,and intergenerational distribution

The paper studies the dynamic allocation effects and intergenerational welfare consequences of environmental taxes. To this end, environmental externalities are introduced in a Blanchard–Yaari overlapping generations model of a small open economy. A rise in environmental taxes – taking into account pre-existing distortionary taxes and endogenous labor supply – is shown to yield an efficiency gain if agents care enough for the environment. The benefits are unevenly distributed across generations because agents are heterogeneous in their capital ownership. An accompanying debt policy can be designed – prescribing debt accumulation at impact and debt redemption in the new steady state – to ensure everybody gains to the same extent. With lump-sum recycling of environmental tax revenue, aggregate employment is unaffected in the short run, but falls in the long run. Furthermore, it raises environmental quality more in the long run than in the short run. Recycling revenue through a cut in labor taxes, however, is shown to yield a rise in employment in the short run, which disappears during transition. In the new steady state, environmental quality is higher at the expense of a lower level of employment.     

Optimizing Environmental Product Life Cycles

In this paper, we propose a methodology, based on materials accounting and operational research techniques, to assess different industry configurations according to their life cycle environmental impacts. Rather than evaluating a specific technology, our methodology searches for the feasible configuration with the minimum impact. This approach allows us to address some basic policy-relevant questions regarding technology choice, investment priorities, industrial structures, and international trade patterns. We demonstrate the methodology in the context of the European pulp and paper industry. We are able to show that current environmental policy's focus on maximizing recycling is optimal now, but that modest improvements in primary pulping technology may shift the optimal industry configuration away from recycling toward more primary pulping with incineration. We show that this will have significant implications for the amount and type of environmental damage, for the location of different stages in the production chain, and for trade between European member states. We caution policy makers that their single-minded focus on recycling may foreclose investment in technologies that could prove environmentally superior. Finally, we hint that member state governments may be fashioning their environmental policy positions at least in part on some of the trade and industrial implications we find.     

Aging,Savings, and Public Pensions in Japan*

We analyze the impact of population aging on Japan's household savings rate and on its public pension system and the impact of that system on Japan's household savings rate and obtain the following results: first, the age structure of Japan's population can explain the level of, and past and future trends in, its household savings rate; second, the rapid aging of Japan's population is causing Japan's household savings rate to decline and this decline can be expected to continue; third, the pay‐as‐you‐go nature of the public pension system, combined with rapid population aging, created considerable intergenerational inequities and increased the savings rates of cohorts born after 1965, which in turn slowed the decline in Japan's household savings rate; and fourth, the 2004 public pension reform alleviated the intergenerational inequities of Japan's public pension system somewhat but will in the long run exacerbate the downward trend in Japan's household savings rate.