Can the Chinese Savings Rate be Explained by Demographics Alone?

#IMF Blog on #China Savings: first, it's not just Households alone, [although (Household Savings)/GDP, top curve in figure below, differs most from the global average]; Corporate and Government savings are high too... (reference Country Report cr17248) pic.twitter.com/58VhZ0cOJk

— Satyen Baindur (@Satyen_Baindur) February 27, 2018

#IMF Blog #China Savings: high savings resulted in both Internal and External imbalances - which have rotated - as (Current Account/GDP) surplus; external imbalance has fallen, the internal imbalance (high) Investment/GDP has risen, though since 2014 beginning to fall... pic.twitter.com/NwT6sioULb

— Satyen Baindur (@Satyen_Baindur) February 27, 2018

#IMF #China: #OverlappingGenerations model w income & interest rates constant able 2 explain ~half the increased Savings 4m #Demographics alone i.e. #OneChild #ageingpopulation #PrecautionarySaving, ↓ #SocialSafetyNet; & w inc & int dynamics can explain all post-2000 increase. pic.twitter.com/iMlu8iIjoc

— Satyen Baindur (@Satyen_Baindur) February 27, 2018

Demographic Trends and the Real Interest Rate

.@bankofengland Staff Working Paper No. 701 'Demographic Trends & the Real Interest Rate': calibrated #Neoclassical #OverlappingGenerations model accounts 4 160bp of the 210bp fall in #Rstar over 1980-2015 - greater propensity to save and hold wealth from higher #LifeExpectancy. pic.twitter.com/BvwfTVlRfD

— Satyen Baindur (@Satyen_Baindur) February 12, 2018

The #BoE working paper compares #OLG model simulations with #Rstar estimates from Holston, Laubach, Williams 2017 @federalreserve @sffed as below, and projects a further 37bp decline in #Rstar by 2050 (& even beyond) #AEs in aggregate; + also v interesting indiv cntries esp USA pic.twitter.com/y2Zw5XxsEY

— Satyen Baindur (@Satyen_Baindur) February 12, 2018