A Comparison of National Saving Rates in the UK, US and Italy
Paper number: 06/12
Paper date: December 9, 2006
Paper Category: Working Paper
Tatiana Kirsanova and James Sefton
We develop the approach of Gokhale et al. (1996), based on the life-cycle model of savings, to decompose the diﬀerences in the national saving rates between the UK, US and Italy. Our work suggests that the US saving rate is lower principally because Americans on average retire later. In contrast, the Italian saving rate is higher predominantly because Italians are credit constrained, particularly when young. We also found that demography and the diﬀerent tax and beneﬁt systems are able to explain little of the cross-sectional diﬀerences in saving rates. The study accounts for the possible importance of intergenerational private transfers in determining saving rates.