TY  - JOUR
AU  - Carroll,Christopher D.
AU  - Weil,David N.
TI  - Saving and Growth: A Reinterpretation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4470
PY  - 1993
Y2  - September 1993
UR  - http://www.nber.org/papers/w4470
L1  - http://www.nber.org/papers/w4470.pdf
N1  - Author contact info:
Christopher D. Carroll
Department of Economics
Mergenthaler 440
Johns Hopkins University
Baltimore, MD 21218
Tel: 410/516-7602
Fax: 410/516-7600
E-Mail: ccarroll@jhu.edu

David N. Weil
Department of Economics
Box B
Brown University
Providence, RI 02912
Tel: 401/863-1754
Fax: 401/863-1970
E-Mail: david_weil@brown.edu
AB  - 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.
ER  -