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| Author: | Paxson, C. |
| Title: | Savings and growth: Evidence from micro data |
| Journal: | European Economic Review
1996 : FEB, VOL. 40:2, p. 255-288 |
| Index terms: | LIFE CYCLES MODELS SAVINGS GROWTH |
| Language: | eng |
| Abstract: | The paper examines whether the observed cross-country correlation btw. economic growth and aggregate saving rates can be explained by models in which higher growth increases saving rates, rather than the other way around. There are two explanations why higher growth might increase saving. First, it is implied that higher growth will increase the life-time wealth of younger savers. Second, it is also implied that consumption responds slowly to unexpected income growth. Evidence shows that higher growth will produce only small increases in aggregate saving rates. |
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