A Comparison of National Saving Rates in the UK, US and Italy

Paper number: 06/12

Paper date: December 9, 2006

Year: 2006

Paper Category: Working Paper

Authors

Tatiana Kirsanova and James Sefton

Abstract

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.

A Comparison of National Saving Rates in the UK, US and Italy A Comparison of National Saving Rates in the UK, US and Italy