What Drives Private Saving Across the World?

TLDR

Saving rates display considerable variation across countries and over time. The paper investigates the factors behind broad saving disparities using a large cross‑country time‑series dataset and empirically assesses policy and non‑policy determinants of saving. The study employs an encompassing empirical approach with the largest cross‑country saving dataset, exploring national and private determinants, using panel instrumental‑variable techniques to correct for endogeneity and heterogeneity, and conducting extensive robustness checks. The paper extends the literature on saving determinants in several dimensions.

Abstract

Saving rates display considerable variation across countries and over time. This paper investigates the factors behind these broad saving disparities using a large cross-country time-series data set constructed for the World Bank Saving project. The paper assesses empirically the policy and non-policy determinants of saving. It follows the empirical literature on saving by using an encompassing empirical approach including a number of potentially relevant saving determinants. However, the paper extends the literature in several dimensions. It uses the largest data set on aggregate saving measures assembled to date. It explores both national and private saving determinants. It uses panel instrumental variable techniques that allow correcting for endogeneity and heterogeneity through internal instruments. Finally, it performs a variety of robustness checks to changes in estimation procedures, data samples and model specification.