Journal of Political Economy Vol. 83 No. 6 1975
A Simultaneous-Equations Model of Savings in Developing Countries
Abstract
Postwar experience has confirmed the central importance of domestic savings rates for capital accumulation and other goals in developing countries. Consequently, both for analytical and for policy purposes, it would be helpful to estimate savings functions which are grounded in economic theory and whose parameters are properly identified and free from simultaneous-equations bias. Accordingly, we have formulated a simultaneous-equations model of aggregate saving in developing countries and estimated its parameters with time-series data for five countries (Brazil, Costa Rica, Israel, the Philippines, and Taiwan). On the basis of the parameter estimates, steady-state savings ratios should rise significantly if these countries experience higher rates of income growth. However, for reasons we discuss, an upward movement in savings rates did not occur in these countries over the sample period.
- DOI
- 10.1086/260390
- Volume
- 83
- Issue
- 6
- Pages
- 1217-1228
- Language
- en
- Sources
- openalex crossref