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Citation Information

Type Journal Article - American Economic Journal: Macroeconomics
Title Why are saving rates of urban households in China rising?
Author(s)
Volume 2
Issue 1
Publication (Day/Month/Year) 2010
Page numbers 93-130
URL http://www.prasad.aem.cornell.edu/doc/ChamonPrasadAEJMacro.Jan10.pdf.pdf
Abstract
From 1995 to 2005, the average urban household savings rate in
China rose by 7 percentage points, to about one-quarter of disposable
income. Savings rates increased across all demographic groups,
and the age profile of savings has an unusual pattern in recent years,
with younger and older households having relatively high savings
rates. We argue that these patterns are best explained by the rising
private burden of expenditures on housing, education, and health
care. These effects and precautionary motives may have been amplified
by financial underdevelopment, including constraints on borrowing
against future income and low returns on financial assets.

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