Uncertainty Shocks and the Dynamics of China’s Household Saving Rate：1978-2010
Read
DownLoad |
| Title | Uncertainty Shocks and the Dynamics of China’s Household Saving Rate：1978-2010
|
| Author | Liu Yaocheng，Ding Jianping and Xu Xiaoping |
| Organization | School of Finance, Shanghai University of Finance and Economics |
| Email | limeiay@126.com |
| Key Words | Uncertainty Shocks; Borrowing Constraints; Interest Rate; Buffer-Stock Model |
| Abstract | As consumers in China can not smooth their consumption when they suffer to uncertainty shocks because of borrow constraints, we confirm in this article that a standard economy growth model is not proper to explain why China’s household saving rate keeps going up since the reform in the ends of 1970s. Based on this standard model, we construct and extent a buffer-stock model to simulate the fluctuation of China’s household saving rate under different kinds of uncertainty shocks, and we find that the model can simulate the household saving rate during 1978 and 2010 very well when the uncertainty shocks gradually get serious, and at the same time, the model can also be used to simulate the fluctuation of China’s interest rate. Finally, we make a simple prediction that, if the uncertainty shocks keep getting serious in the future, China’s household saving rate may continue going up and a special zeros interest rate period may come to realize. |
| Serial Number | WP154 |
| Time | 2012-02-14 |
|