NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Saving and Growth: A Reinterpretation

Christopher D. Carroll, David N. Weil

NBER Working Paper No. 4470
Issued in September 1993
NBER Program(s):   EFG

We examine the relationship between income growth and saving using both cross-country and household data. At the aggregate level, we find that growth Granger causes saving, but that saving does not Granger cause growth. Using household data, we find that households with predictably higher income growth save more than households with predictably low growth. We argue that standard Permanent Income models of consumption cannot explain these findings, but that a model of consumption with habit formation may. The positive effect of growth on saving implies that previous estimates of the effect of saving on growth may be overstated.

download in pdf format
   (878 K)

email paper

This paper is available as PDF (878 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Carnegie-Rochester Conference Series on Public Policy, Vol. 40, June 1994,pp. 133-192

Users who downloaded this paper also downloaded these:
Aghion, Comin, and Howitt w12275 When Does Domestic Saving Matter for Economic Growth?
Edwards w5097 Why are Saving Rates so Different Across Countries?: An International Comparative Analysis
Paxson w5301 Saving and Growth: Evidence from Micro Data
Feldstein and Horioka w0310 Domestic Savings and International Capital Flows
Collins Saving Behavior in Ten Developing Countries
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us