Advanced

Demographic Changes, Household Savings and Economic Growth in All China: A Time-Series Approach

Xu, Ya LU (2012) EKHR51 20121
Department of Economic History
Abstract
This paper investigates the effects of population age structure and economic growth on the household saving rate in China and examines whether life cycle hypothesis (LCH) holds in the country like China, where LCH may be less applicable. By applying two popular time series econometric techniques (cointegration technique and vector error correction model), the author examines the long-run convergence between household saving rate, age structure of population and GDP growth in all China from 1963 to 2006. The empirical findings can be summarized as follows. Firstly, there exists a long-run steady-state relationship between them. Secondly, both the youth dependency ratio and old dependency ratio have a negative and significant impact on the... (More)
This paper investigates the effects of population age structure and economic growth on the household saving rate in China and examines whether life cycle hypothesis (LCH) holds in the country like China, where LCH may be less applicable. By applying two popular time series econometric techniques (cointegration technique and vector error correction model), the author examines the long-run convergence between household saving rate, age structure of population and GDP growth in all China from 1963 to 2006. The empirical findings can be summarized as follows. Firstly, there exists a long-run steady-state relationship between them. Secondly, both the youth dependency ratio and old dependency ratio have a negative and significant impact on the household saving rate, while the GDP growth rate have a positive effect on the household saving rate. Therefore, the results support the life cycle hypothesis (LCH). Thirdly, with regards to the vector error correction model (VECM), the estimation results show that all variables expect youth dependency ratio (YDR) will not have a significant adjustment to a new equilibrium if there is a disturbance occurred in the whole system. (Less)
Please use this url to cite or link to this publication:
author
Xu, Ya LU
supervisor
organization
course
EKHR51 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Life-Cycle Hypothesis, Household savings rate, Dependency ratios, Economic growth, Cointegration test, Vector Error Correction Model (VECM).
language
English
id
2796810
date added to LUP
2012-08-07 11:57:04
date last changed
2012-08-07 11:57:04
@misc{2796810,
  abstract     = {This paper investigates the effects of population age structure and economic growth on the household saving rate in China and examines whether life cycle hypothesis (LCH) holds in the country like China, where LCH may be less applicable. By applying two popular time series econometric techniques (cointegration technique and vector error correction model), the author examines the long-run convergence between household saving rate, age structure of population and GDP growth in all China from 1963 to 2006. The empirical findings can be summarized as follows. Firstly, there exists a long-run steady-state relationship between them. Secondly, both the youth dependency ratio and old dependency ratio have a negative and significant impact on the household saving rate, while the GDP growth rate have a positive effect on the household saving rate. Therefore, the results support the life cycle hypothesis (LCH). Thirdly, with regards to the vector error correction model (VECM), the estimation results show that all variables expect youth dependency ratio (YDR) will not have a significant adjustment to a new equilibrium if there is a disturbance occurred in the whole system.},
  author       = {Xu, Ya},
  keyword      = {Life-Cycle Hypothesis,Household savings rate,Dependency ratios,Economic growth,Cointegration test,Vector Error Correction Model (VECM).},
  language     = {eng},
  note         = {Student Paper},
  title        = {Demographic Changes, Household Savings and Economic Growth in All China: A Time-Series Approach},
  year         = {2012},
}