Saving and Growth: A Reinterpretation / Christopher D. Carroll, David N. Weil.

Format:

Book

Author/Creator:

Carroll, Christopher D.

Contributor:

National Bureau of Economic Research.

Weil, David N.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4470.

NBER working paper series no. w4470

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Saving and Growth

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1993.

Summary:

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.

Notes:

Print version record

September 1993.