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Transitional dynamics of the saving rate and economic growth

Published online by Cambridge University Press:  24 August 2021

Markus Brueckner ,
Tomoo Kikuchi  and
George Vachadze
Markus Brueckner
Affiliation:
Research School of Economics, Australian National University, Canberra, Australia
Tomoo Kikuchi*
Affiliation:
Graduate School of Asia-Pacific Studies, Waseda University, Tokyo, Japan
George Vachadze
Affiliation:
Department of Economics, College of Staten Island, City University of New York, New York, The United States of America
*
*Corresponding author: Tomoo Kikuchi. Email: [email protected]
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Abstract

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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.

Keywords

Economic growthsaving ratecredit constraintsentrepreneursD9E2O1
Type
Articles
Information
Macroeconomic Dynamics , Volume 27 , Issue 2 , March 2023 , pp. 482 - 505
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
Copyright
© Cambridge University Press 2021

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