NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Why Aren't Savings Rates in Latin America Procyclical?

Philip R. Lane, Aaron Tornell

NBER Working Paper No. 6502
Issued in April 1998
NBER Program(s):   IFM

We document a striking empirical regularity: Latin American savings rates are as a rule substantially less procyclical than for OECD countries and in some cases are actually countercyclical. We build a non-representative agent intertemporal macroeconomic model that rationalizes this phenomenon as the equilibrium outcome of interaction between multiple groups that have common access to aggregate income. We conclude by suggesting that institutional reform may hold the key to improving the cyclical behavior of savings in Latin America.

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Document Object Identifier (DOI): 10.3386/w6502

Published: Journal of Development Economics, Vol. 57, no. 1 (October 1998): 185-199. citation courtesy of

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