Franco Modigliani, Ezio Tarantelli; A Generalization of the Phillips Curve for a Developing Country12, The Review of Economic Studies, Volume 40, Issue 2,

China's per capita income ranks below 100th in the world. Its saving rate, however, has been one of the highest worldwide in recent decades. In this paper, we attempt to explain the seeming paradox within the framework of the Life-Cycle Hypothesis developed by Franco Modigliani. The key LCH variables are income and population growth. Our results based on data we put together from official sources show that income growth has been the dominant factor behind the dramatic increase in China's saving rate, as predicted by the LCH. Demographic structure and inflation also had significant impact on the fluctuations of the saving rate.

Journal Article The Pasinetti Paradox in Neoclassical and More General Models Get access Paul A. Samuelson, Paul A. Samuelson Massachusetts Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar Franco Modigliani Franco Modigliani Massachusetts Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 33, Issue 4, October 1966, Pages 269–301, https://doi.org/10.2307/2974425 Published: 01 October 1966