Precautionary Saving of Chinese and U.S. Households / Horag Choi, Steven Lugauer, Nelson C. Mark.

Format:

Book

Author/Creator:

Choi, Horag.

Contributor:

National Bureau of Economic Research.

Lugauer, Steven.

Mark, Nelson C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20527.

NBER working paper series no. w20527

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

We employ a model of precautionary saving to study why household saving rates are so high in China and so low in the US. The use of recursive preferences gives a convenient decomposition of saving into precautionary and non precautionary components. This decomposition indicates that over 80 percent of China's saving rate and nearly all of the US saving arises from the precautionary motive. The difference in the income growth rate between China and the US is vastly more important for explaining saving rate differences than differences in income risk. We estimate the preference parameters and find that Chinese and US households are more similar in their attitude toward risk than in their intertemporal substitutability of consumption.

Notes:

Print version record

September 2014.