Solow in Transition : Macro and Micro Determinants of Savings in Armenia

Diaby, Mohamed; Coulibaly, Souleymane

Solow in Transition : Macro and Micro Determinants of Savings in Armenia

Autores

Diaby, Mohamed

Coulibaly, Souleymane

Editor

World Bank, Washington, DC

Descripción

This paper analyzes and reconciles macro and micro evidence on savings and factors that affect savings, as well as possible policy implications. At the aggregate level, the main question is how savings are affected by growth and macroeconomic policies and variables (fiscal policy, exchange rate, for example) and the breadth of financial markets. Some of these macro determinants can be reconciled with microeconomic evidence of the savings behavior of households. Using macroeconomic quarterly data and household survey data, the analysis explores the determinants of the savings rate at the macroeconomic and microeconomic levels, using the typical econometric models used in the literature (long-term co-integration relation and short-term error correction model for the macro determinants; linear multivariate models for the micro determinants). The long-term relationship indicates that a 10-percent increase in gross domestic product per capita would add 3.7 percentage points to the savings rate in the long run. The short-term relationship depicts a strong catch-up process to the long-run equilibrium, with quarterly changes in gross domestic product per capita and openness strongly correlated with quarterly changes in the savings rate. The characteristics of households that represent the volatility of expected income, such as education and access to borrowing or remittances, significantly impact saving rates. The macroeconomic and microeconomic analyses of the determinants of saving rates in Armenia point to three policy areas: the macroeconomic environment, the financial sector, and the role of remittances.

Palabras clave

ADVERSE EFFECTS, AGGREGATE DEMAND, AGRICULTURE, BANKING SECTOR, BASE YEAR, BORROWING, BORROWINGS, BUDGET DEFICITS, BUSINESS INVESTMENT, CAPITAL MARKET, CASH FLOW, CENTRAL BANK, COMPARATIVE ANALYSIS, COMPARATIVE ECONOMICS, CONSUMER DURABLES, CONSUMERS, CREDIT CONSTRAINT, CREDIT INSTITUTIONS, CURRENT ACCOUNT, CURRENT ACCOUNT DEFICIT, DEBT, DEBT RATIO, DEBT SERVICING, DEBTS, DEMAND FOR FUNDS, DEPOSIT, DEPOSIT RATE, DEVELOPING COUNTRIES, DEVELOPING ECONOMIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DISPOSABLE INCOME, DIVERSIFICATION, DIVERSIFIED INCOME, DUMMY VARIABLE, DUMMY VARIABLES, DURABLE, DURABLE ASSETS, DURABLE GOODS, ECONOMETRIC MODELS, ECONOMIC POLICY, ECONOMIC THEORY, EDUCATION LEVEL, EDUCATION LEVELS, EDUCATIONAL LEVELS, EMERGING MARKETS, EMPLOYEE, EMPLOYMENT STATUS, EXCHANGE MARKET, EXCHANGE RATE, EXPANSIONARY MONETARY POLICY, EXPATRIATE, EXPLOITATION, EXPORTS, EXPOSURE, EXTERNAL FINANCING, EXTERNAL SHOCKS, FAMILIES, FAMILY INCOME, FINANCES, FINANCIAL ACCESS, FINANCIAL CRISIS, FINANCIAL EXPOSURE, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL MARKETS, FINANCIAL PRODUCTS, FINANCIAL RETURNS, FINANCIAL SECTOR, FINANCIAL SERVICES, FISCAL DEFICIT, FISCAL POLICY, FORMAL SAVING, GDP, GDP PER CAPITA, GOVERNMENT FINANCES, GOVERNMENT SECURITIES, GOVERNMENT SECURITIES MARKET, GREATER ACCESS, GROSS DOMESTIC PRODUCT, GROSS DOMESTIC PRODUCT PER CAPITA, GROWTH RATE, GROWTH RATES, HOLDINGS, HOME OWNERSHIP, HOUSEHOLD HEAD, HOUSEHOLD INCOME, HOUSEHOLD SAVING, HOUSEHOLD SAVINGS, HOUSEHOLD SIZE, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLDS, INCOME EFFECT, INCOME LEVEL, INCOME LEVELS, INCOME STREAM, INCOME STREAMS, INCOME VARIABILITY, INCOMES, INFLATION, INFLATION EXPECTATIONS, INFLATION TARGETING, INFORMAL CREDIT, INTEREST RATE, INTERNATIONAL BANK, INVESTMENT FINANCING, INVESTMENT PROJECTS, LEVEL OF ASSETS, LIFE CYCLE HYPOTHESIS, LIFE INSURANCE, LIQUIDITY, LIQUIDITY CONSTRAINTS, LOW-INCOME COUNTRIES, MACROECONOMIC ANALYSIS, MACROECONOMIC ENVIRONMENT, MACROECONOMIC POLICIES, MACROECONOMICS, MARKET CAPITALIZATION, MARKET PRICE, MICRO-CREDIT, MICROECONOMIC ANALYSES, MIDDLE INCOME COUNTRIES, MONETARY POLICY, NATIONAL POVERTY, NET EXPORTS, OLD AGE, OPEN ECONOMY, OPEN MARKET, OPEN MARKET OPERATIONS, OPTIMIZATION, OUTPUT, PENSION, PENSION REFORM, PENSION SYSTEM, PENSIONS, PERMANENT INCOME, PERMANENT INCOME HYPOTHESES, PERMANENT INCOME HYPOTHESIS, PIH, POLITICAL ECONOMY, POOR, POTENTIAL INVESTMENTS, POVERTY REDUCTION, PRIVATE SAVING, PRIVATE SAVINGS, PUBLIC DEFICIT, PUBLIC SAVING, PUBLIC SAVINGS, REAL ESTATE, REAL EXCHANGE RATE, REMITTANCES, RETURN, RURAL, RURAL AREA, RURAL AREAS, SAVINGS, SAVINGS RATE, SAVINGS RATES, SECURITIES MARKET, STOCK EXCHANGE, SUBSTITUTION EFFECT, SUSTAINABLE GROWTH, TAXATION, TIME DEPOSIT, TRADE POLICY, TRADING, TRANSITION ECONOMIES, URBANIZATION, VOLATILITY, WEALTH, WORLD DEVELOPMENT INDICATORS