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Abstract
The aggregate saving indicator does not directly reflect changes in individuals' microeconomic behavior. From the official statistics' point of view, households choose between spending, which generates additional income and consumption in the economy, and setting money aside, which does not. Formally, households may not (if the authors disregard housing investment) choose to save, because the aggregate saving statistical indicator is a residual concept defined as the ensuing difference between aggregate disposable income and consumption. It measures the change in net worth, which, in a closed economy, may only be generated by the production of capital goods and an increase in inventories. Using an agent-based model, the authors show that shocks unrelated to structural changes in households' behavior may generate positively correlated fluctuations in the aggregate saving rate, productivity growth and lending. Meanwhile, a genuine increase in the average individual propensity to save is not necessarily associated with a higher aggregate saving rate.
(Published in Special Issue Agent-based modelling and complexity economics)
JEL C63 G21 O16 O40
Keywords Saving, economic growth, credit, agent-based model, national accounts
(ProQuest: ... denotes formulae omitted.)
1Introduction
Saving plays many different roles in economics. Depending on the school of thought, its fluctuations may be regarded as a core driver of long-term economic development, an indication of aggregate demand cycles or a key source of global imbalances. One particular strand of literature emphasizes the correlation between the aggregate saving rate and the long-term growth rate (see e.g. Carroll et al., 2000, Aghion et al., 2016 for a review). After carefully controlling for possible endogeneity, some studies confirm that an increase in saving rates in fact causes an acceleration of growth.
In the neighboring strand of research on the determinants of fluctuations in the aggregate saving rate, the latter are often regarded as direct representations of individuals' propensity to consume out of their income. Changes in the aggregate saving rate are interpreted as a reflection of changes in individuals' behavior that are associated with, for example, the intention to maintain a certain living standard after retirement, taking precautionary measures for future uncertainties or simply transformation in traditional cultural and social norms (e.g. Grigoli et al., 2014). This kind of analysis is conducted particularly often in relation to China and other Asian...