Urban and Rural Household Saving in China

Household saving behavior in China during the past thirty years is studied by using econometric models. The urban sector and the rural sector are investigated separately: the time-varying-parameter technique is applied to urban time-series data, and panel data are used for estimation of the rural sector. The estimated results of the models are robust and in line with those of similar studies of other countries. Recent economic reforms and developments in China have drawn great attention from economists. One of the most important factors in both the theory of, and policy prescription for, economic development is the domestic savings rate. As the reform moves the economy in a more decentralized direction, can China maintain its savings rate at the high level of the past few years? With the annual publication of the Statistical Yearbook of China (China (1981 and various issues); hereinafter referred to as the Yearbook) since 1981, a systematic study of saving in China has become possible. Such a study serves to improve understanding about the effects of the recent economic liberalization in China and to provide preliminary results for future studies as well. The domestic savings rate is taken here to mean total domestic savings as a percent of gross domestic product (GDP). By source, total domestic savings constitute government savings, business