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![Page 1: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/1.jpg)
Life Cycle Earnings in a Fast-Growing Economy
Zheng Michael SongDennis Tao Yang
Discussion by Christopher CarrollJanuary 7, 2011
Song and Yang China’s Saving Rate
![Page 2: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/2.jpg)
Bottom Line
Very interesting paper; fabulous new data from China
“Highly Preliminary” – as is my critique.
Previous literature: Habit formation, precautionary saving,capital market imperfections, or other factors are needed toexplain remarkable increase in Chinese saving rates
Authors: It is explainable by an old-fashioned life cycle model
Intertemporally separable utility (no habits)Perfect foresight about income growthNo important capital market imperfections
Just need to account for changing pattern of income by age
Song and Yang China’s Saving Rate
![Page 3: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/3.jpg)
Bottom Line
Very interesting paper; fabulous new data from China
“Highly Preliminary” – as is my critique.
Previous literature: Habit formation, precautionary saving,capital market imperfections, or other factors are needed toexplain remarkable increase in Chinese saving rates
Authors: It is explainable by an old-fashioned life cycle model
Intertemporally separable utility (no habits)Perfect foresight about income growthNo important capital market imperfections
Just need to account for changing pattern of income by age
Song and Yang China’s Saving Rate
![Page 4: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/4.jpg)
Bottom Line
Very interesting paper; fabulous new data from China
“Highly Preliminary” – as is my critique.
Previous literature: Habit formation, precautionary saving,capital market imperfections, or other factors are needed toexplain remarkable increase in Chinese saving rates
Authors: It is explainable by an old-fashioned life cycle model
Intertemporally separable utility (no habits)Perfect foresight about income growthNo important capital market imperfections
Just need to account for changing pattern of income by age
Song and Yang China’s Saving Rate
![Page 5: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/5.jpg)
Bottom Line
Very interesting paper; fabulous new data from China
“Highly Preliminary” – as is my critique.
Previous literature: Habit formation, precautionary saving,capital market imperfections, or other factors are needed toexplain remarkable increase in Chinese saving rates
Authors: It is explainable by an old-fashioned life cycle model
Intertemporally separable utility (no habits)Perfect foresight about income growthNo important capital market imperfections
Just need to account for changing pattern of income by age
Song and Yang China’s Saving Rate
![Page 6: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/6.jpg)
Bottom Line
Very interesting paper; fabulous new data from China
“Highly Preliminary” – as is my critique.
Previous literature: Habit formation, precautionary saving,capital market imperfections, or other factors are needed toexplain remarkable increase in Chinese saving rates
Authors: It is explainable by an old-fashioned life cycle model
Intertemporally separable utility (no habits)Perfect foresight about income growthNo important capital market imperfections
Just need to account for changing pattern of income by age
Song and Yang China’s Saving Rate
![Page 7: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/7.jpg)
Bottom Line
Very interesting paper; fabulous new data from China
“Highly Preliminary” – as is my critique.
Previous literature: Habit formation, precautionary saving,capital market imperfections, or other factors are needed toexplain remarkable increase in Chinese saving rates
Authors: It is explainable by an old-fashioned life cycle model
Intertemporally separable utility (no habits)Perfect foresight about income growthNo important capital market imperfections
Just need to account for changing pattern of income by age
Song and Yang China’s Saving Rate
![Page 8: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/8.jpg)
Bottom Line
Very interesting paper; fabulous new data from China
“Highly Preliminary” – as is my critique.
Previous literature: Habit formation, precautionary saving,capital market imperfections, or other factors are needed toexplain remarkable increase in Chinese saving rates
Authors: It is explainable by an old-fashioned life cycle model
Intertemporally separable utility (no habits)Perfect foresight about income growthNo important capital market imperfections
Just need to account for changing pattern of income by age
Song and Yang China’s Saving Rate
![Page 9: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/9.jpg)
Bottom Line
Very interesting paper; fabulous new data from China
“Highly Preliminary” – as is my critique.
Previous literature: Habit formation, precautionary saving,capital market imperfections, or other factors are needed toexplain remarkable increase in Chinese saving rates
Authors: It is explainable by an old-fashioned life cycle model
Intertemporally separable utility (no habits)Perfect foresight about income growthNo important capital market imperfections
Just need to account for changing pattern of income by age
Song and Yang China’s Saving Rate
![Page 10: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/10.jpg)
Depends on What the Meaning of Is Is
My interpetation: Chinese behavior is not explained credibly by anoff-the-shelf model
By “off the shelf” I mean a model with:
Preferences that are stable over time and across countries
Time preference rate; intertemporal elasticity; bequest motive
Plausible assumptions about expectations of income growth
Why “stable” preferences?
Arbitrary variation in preferences can explain anything
What are “plausible” expectations about income growth?
Forecasts that could plausibly have been made at the time
Agents not allowed “sneak peek” at future outcomes (notperfect foresight)
Song and Yang China’s Saving Rate
![Page 11: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/11.jpg)
Depends on What the Meaning of Is Is
My interpetation: Chinese behavior is not explained credibly by anoff-the-shelf model
By “off the shelf” I mean a model with:
Preferences that are stable over time and across countries
Time preference rate; intertemporal elasticity; bequest motive
Plausible assumptions about expectations of income growth
Why “stable” preferences?
Arbitrary variation in preferences can explain anything
What are “plausible” expectations about income growth?
Forecasts that could plausibly have been made at the time
Agents not allowed “sneak peek” at future outcomes (notperfect foresight)
Song and Yang China’s Saving Rate
![Page 12: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/12.jpg)
Depends on What the Meaning of Is Is
My interpetation: Chinese behavior is not explained credibly by anoff-the-shelf model
By “off the shelf” I mean a model with:
Preferences that are stable over time and across countries
Time preference rate; intertemporal elasticity; bequest motive
Plausible assumptions about expectations of income growth
Why “stable” preferences?
Arbitrary variation in preferences can explain anything
What are “plausible” expectations about income growth?
Forecasts that could plausibly have been made at the time
Agents not allowed “sneak peek” at future outcomes (notperfect foresight)
Song and Yang China’s Saving Rate
![Page 13: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/13.jpg)
Depends on What the Meaning of Is Is
My interpetation: Chinese behavior is not explained credibly by anoff-the-shelf model
By “off the shelf” I mean a model with:
Preferences that are stable over time and across countries
Time preference rate; intertemporal elasticity; bequest motive
Plausible assumptions about expectations of income growth
Why “stable” preferences?
Arbitrary variation in preferences can explain anything
What are “plausible” expectations about income growth?
Forecasts that could plausibly have been made at the time
Agents not allowed “sneak peek” at future outcomes (notperfect foresight)
Song and Yang China’s Saving Rate
![Page 14: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/14.jpg)
Depends on What the Meaning of Is Is
My interpetation: Chinese behavior is not explained credibly by anoff-the-shelf model
By “off the shelf” I mean a model with:
Preferences that are stable over time and across countries
Time preference rate; intertemporal elasticity; bequest motive
Plausible assumptions about expectations of income growth
Why “stable” preferences?
Arbitrary variation in preferences can explain anything
What are “plausible” expectations about income growth?
Forecasts that could plausibly have been made at the time
Agents not allowed “sneak peek” at future outcomes (notperfect foresight)
Song and Yang China’s Saving Rate
![Page 15: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/15.jpg)
Depends on What the Meaning of Is Is
My interpetation: Chinese behavior is not explained credibly by anoff-the-shelf model
By “off the shelf” I mean a model with:
Preferences that are stable over time and across countries
Time preference rate; intertemporal elasticity; bequest motive
Plausible assumptions about expectations of income growth
Why “stable” preferences?
Arbitrary variation in preferences can explain anything
What are “plausible” expectations about income growth?
Forecasts that could plausibly have been made at the time
Agents not allowed “sneak peek” at future outcomes (notperfect foresight)
Song and Yang China’s Saving Rate
![Page 16: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/16.jpg)
What version of a LC model is consistent with their data?
1 Today’s Chinese HH’s are much more pessimistic about theirown personal income growth than today’s American HH’s
2 HH’s in 2007 believed income growth in the future would belower than households believed growth would be in 1992.
In 15 years to 1992, avg income growth was a remarkable 5pct per yearin 15 years to 2007, avg income growth was an amazing 8 pctper year
1992-2007 certainly fastest sustained growth in Chinese history
Required beliefs: HH’s in 2007 (after astounding 1992-2007growth) are much more pessimistic about growth than HH’s atsimilar ages were in 1992
3 HH’s in 1992 were more pessimistic about income growththan HH’s in 1978
Economists have been accused of being willing to believe 8impossible things before breakfast. But it is slightly after breakfastnow, so you might be excused if you join me in not believing thesethings.
Song and Yang China’s Saving Rate
![Page 17: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/17.jpg)
What version of a LC model is consistent with their data?
1 Today’s Chinese HH’s are much more pessimistic about theirown personal income growth than today’s American HH’s
2 HH’s in 2007 believed income growth in the future would belower than households believed growth would be in 1992.
In 15 years to 1992, avg income growth was a remarkable 5pct per yearin 15 years to 2007, avg income growth was an amazing 8 pctper year
1992-2007 certainly fastest sustained growth in Chinese history
Required beliefs: HH’s in 2007 (after astounding 1992-2007growth) are much more pessimistic about growth than HH’s atsimilar ages were in 1992
3 HH’s in 1992 were more pessimistic about income growththan HH’s in 1978
Economists have been accused of being willing to believe 8impossible things before breakfast. But it is slightly after breakfastnow, so you might be excused if you join me in not believing thesethings.
Song and Yang China’s Saving Rate
![Page 18: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/18.jpg)
What version of a LC model is consistent with their data?
1 Today’s Chinese HH’s are much more pessimistic about theirown personal income growth than today’s American HH’s
2 HH’s in 2007 believed income growth in the future would belower than households believed growth would be in 1992.
In 15 years to 1992, avg income growth was a remarkable 5pct per yearin 15 years to 2007, avg income growth was an amazing 8 pctper year
1992-2007 certainly fastest sustained growth in Chinese history
Required beliefs: HH’s in 2007 (after astounding 1992-2007growth) are much more pessimistic about growth than HH’s atsimilar ages were in 1992
3 HH’s in 1992 were more pessimistic about income growththan HH’s in 1978
Economists have been accused of being willing to believe 8impossible things before breakfast. But it is slightly after breakfastnow, so you might be excused if you join me in not believing thesethings.
Song and Yang China’s Saving Rate
![Page 19: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/19.jpg)
What version of a LC model is consistent with their data?
1 Today’s Chinese HH’s are much more pessimistic about theirown personal income growth than today’s American HH’s
2 HH’s in 2007 believed income growth in the future would belower than households believed growth would be in 1992.
In 15 years to 1992, avg income growth was a remarkable 5pct per yearin 15 years to 2007, avg income growth was an amazing 8 pctper year
1992-2007 certainly fastest sustained growth in Chinese history
Required beliefs: HH’s in 2007 (after astounding 1992-2007growth) are much more pessimistic about growth than HH’s atsimilar ages were in 1992
3 HH’s in 1992 were more pessimistic about income growththan HH’s in 1978
Economists have been accused of being willing to believe 8impossible things before breakfast. But it is slightly after breakfastnow, so you might be excused if you join me in not believing thesethings.
Song and Yang China’s Saving Rate
![Page 20: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/20.jpg)
What version of a LC model is consistent with their data?
1 Today’s Chinese HH’s are much more pessimistic about theirown personal income growth than today’s American HH’s
2 HH’s in 2007 believed income growth in the future would belower than households believed growth would be in 1992.
In 15 years to 1992, avg income growth was a remarkable 5pct per yearin 15 years to 2007, avg income growth was an amazing 8 pctper year
1992-2007 certainly fastest sustained growth in Chinese history
Required beliefs: HH’s in 2007 (after astounding 1992-2007growth) are much more pessimistic about growth than HH’s atsimilar ages were in 1992
3 HH’s in 1992 were more pessimistic about income growththan HH’s in 1978
Economists have been accused of being willing to believe 8impossible things before breakfast. But it is slightly after breakfastnow, so you might be excused if you join me in not believing thesethings.
Song and Yang China’s Saving Rate
![Page 21: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/21.jpg)
What version of a LC model is consistent with their data?
1 Today’s Chinese HH’s are much more pessimistic about theirown personal income growth than today’s American HH’s
2 HH’s in 2007 believed income growth in the future would belower than households believed growth would be in 1992.
In 15 years to 1992, avg income growth was a remarkable 5pct per yearin 15 years to 2007, avg income growth was an amazing 8 pctper year
1992-2007 certainly fastest sustained growth in Chinese history
Required beliefs: HH’s in 2007 (after astounding 1992-2007growth) are much more pessimistic about growth than HH’s atsimilar ages were in 1992
3 HH’s in 1992 were more pessimistic about income growththan HH’s in 1978
Economists have been accused of being willing to believe 8impossible things before breakfast. But it is slightly after breakfastnow, so you might be excused if you join me in not believing thesethings.
Song and Yang China’s Saving Rate
![Page 22: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/22.jpg)
What version of a LC model is consistent with their data?
1 Today’s Chinese HH’s are much more pessimistic about theirown personal income growth than today’s American HH’s
2 HH’s in 2007 believed income growth in the future would belower than households believed growth would be in 1992.
In 15 years to 1992, avg income growth was a remarkable 5pct per yearin 15 years to 2007, avg income growth was an amazing 8 pctper year
1992-2007 certainly fastest sustained growth in Chinese history
Required beliefs: HH’s in 2007 (after astounding 1992-2007growth) are much more pessimistic about growth than HH’s atsimilar ages were in 1992
3 HH’s in 1992 were more pessimistic about income growththan HH’s in 1978
Economists have been accused of being willing to believe 8impossible things before breakfast. But it is slightly after breakfastnow, so you might be excused if you join me in not believing thesethings.
Song and Yang China’s Saving Rate
![Page 23: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/23.jpg)
What version of a LC model is consistent with their data?
1 Today’s Chinese HH’s are much more pessimistic about theirown personal income growth than today’s American HH’s
2 HH’s in 2007 believed income growth in the future would belower than households believed growth would be in 1992.
In 15 years to 1992, avg income growth was a remarkable 5pct per yearin 15 years to 2007, avg income growth was an amazing 8 pctper year
1992-2007 certainly fastest sustained growth in Chinese history
Required beliefs: HH’s in 2007 (after astounding 1992-2007growth) are much more pessimistic about growth than HH’s atsimilar ages were in 1992
3 HH’s in 1992 were more pessimistic about income growththan HH’s in 1978
Economists have been accused of being willing to believe 8impossible things before breakfast. But it is slightly after breakfastnow, so you might be excused if you join me in not believing thesethings.
Song and Yang China’s Saving Rate
![Page 24: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/24.jpg)
What version of a LC model is consistent with their data?
1 Today’s Chinese HH’s are much more pessimistic about theirown personal income growth than today’s American HH’s
2 HH’s in 2007 believed income growth in the future would belower than households believed growth would be in 1992.
In 15 years to 1992, avg income growth was a remarkable 5pct per yearin 15 years to 2007, avg income growth was an amazing 8 pctper year
1992-2007 certainly fastest sustained growth in Chinese history
Required beliefs: HH’s in 2007 (after astounding 1992-2007growth) are much more pessimistic about growth than HH’s atsimilar ages were in 1992
3 HH’s in 1992 were more pessimistic about income growththan HH’s in 1978
Economists have been accused of being willing to believe 8impossible things before breakfast. But it is slightly after breakfastnow, so you might be excused if you join me in not believing thesethings.
Song and Yang China’s Saving Rate
![Page 25: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/25.jpg)
Accounting for Growth
Alternatives:1 Individual (idiosyncratic)
Affects only one specific household/person
2 Generational (cohort)
Affects similarly every household/person born at the same date
3 Societal (time)
Affects every household/person same way at same time
For aggregate questions (‘national saving rate’), (2) and (3) are key
Song and Yang China’s Saving Rate
![Page 26: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/26.jpg)
Accounting for Growth
Alternatives:1 Individual (idiosyncratic)
Affects only one specific household/person
2 Generational (cohort)
Affects similarly every household/person born at the same date
3 Societal (time)
Affects every household/person same way at same time
For aggregate questions (‘national saving rate’), (2) and (3) are key
Song and Yang China’s Saving Rate
![Page 27: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/27.jpg)
Accounting for Growth
Alternatives:1 Individual (idiosyncratic)
Affects only one specific household/person
2 Generational (cohort)
Affects similarly every household/person born at the same date
3 Societal (time)
Affects every household/person same way at same time
For aggregate questions (‘national saving rate’), (2) and (3) are key
Song and Yang China’s Saving Rate
![Page 28: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/28.jpg)
Accounting for Growth
Alternatives:1 Individual (idiosyncratic)
Affects only one specific household/person
2 Generational (cohort)
Affects similarly every household/person born at the same date
3 Societal (time)
Affects every household/person same way at same time
For aggregate questions (‘national saving rate’), (2) and (3) are key
Song and Yang China’s Saving Rate
![Page 29: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/29.jpg)
Accounting for Growth
Alternatives:1 Individual (idiosyncratic)
Affects only one specific household/person
2 Generational (cohort)
Affects similarly every household/person born at the same date
3 Societal (time)
Affects every household/person same way at same time
For aggregate questions (‘national saving rate’), (2) and (3) are key
Song and Yang China’s Saving Rate
![Page 30: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/30.jpg)
Accounting for Growth
Alternatives:1 Individual (idiosyncratic)
Affects only one specific household/person
2 Generational (cohort)
Affects similarly every household/person born at the same date
3 Societal (time)
Affects every household/person same way at same time
For aggregate questions (‘national saving rate’), (2) and (3) are key
Song and Yang China’s Saving Rate
![Page 31: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/31.jpg)
Accounting for Growth
Alternatives:1 Individual (idiosyncratic)
Affects only one specific household/person
2 Generational (cohort)
Affects similarly every household/person born at the same date
3 Societal (time)
Affects every household/person same way at same time
For aggregate questions (‘national saving rate’), (2) and (3) are key
Song and Yang China’s Saving Rate
![Page 32: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/32.jpg)
Accounting for Growth
Alternatives:1 Individual (idiosyncratic)
Affects only one specific household/person
2 Generational (cohort)
Affects similarly every household/person born at the same date
3 Societal (time)
Affects every household/person same way at same time
For aggregate questions (‘national saving rate’), (2) and (3) are key
Song and Yang China’s Saving Rate
![Page 33: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/33.jpg)
Growth Decomposition
Friedman-definition “permanent income”: Avg for “similar” people
For person age 25 in 1992:
ppp1992,25 = Date1992 + GenerationY + Wrinkles1992
For person age 25 in 2007:
ppp2007,25 = Date2007 + GenerationZ + Wrinkles2007
For person age 40 in 2007
ppp2007,40 = Date2007 + GenerationY + Wrinkles2007
Data are cross-section, both date and wrinkles have changed:
same person︷ ︸︸ ︷ppp2007,40 − ppp1992,25 = ∆Date +
=0︷ ︸︸ ︷∆Generation +∆Wrinkles
Song and Yang China’s Saving Rate
![Page 34: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/34.jpg)
Growth Decomposition
Friedman-definition “permanent income”: Avg for “similar” people
For person age 25 in 1992:
ppp1992,25 = Date1992 + GenerationY + Wrinkles1992
For person age 25 in 2007:
ppp2007,25 = Date2007 + GenerationZ + Wrinkles2007
For person age 40 in 2007
ppp2007,40 = Date2007 + GenerationY + Wrinkles2007
Data are cross-section, both date and wrinkles have changed:
same person︷ ︸︸ ︷ppp2007,40 − ppp1992,25 = ∆Date +
=0︷ ︸︸ ︷∆Generation +∆Wrinkles
Song and Yang China’s Saving Rate
![Page 35: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/35.jpg)
Growth Decomposition
Friedman-definition “permanent income”: Avg for “similar” people
For person age 25 in 1992:
ppp1992,25 = Date1992 + GenerationY + Wrinkles1992
For person age 25 in 2007:
ppp2007,25 = Date2007 + GenerationZ + Wrinkles2007
For person age 40 in 2007
ppp2007,40 = Date2007 + GenerationY + Wrinkles2007
Data are cross-section, both date and wrinkles have changed:
same person︷ ︸︸ ︷ppp2007,40 − ppp1992,25 = ∆Date +
=0︷ ︸︸ ︷∆Generation +∆Wrinkles
Song and Yang China’s Saving Rate
![Page 36: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/36.jpg)
Growth Decomposition
Friedman-definition “permanent income”: Avg for “similar” people
For person age 25 in 1992:
ppp1992,25 = Date1992 + GenerationY + Wrinkles1992
For person age 25 in 2007:
ppp2007,25 = Date2007 + GenerationZ + Wrinkles2007
For person age 40 in 2007
ppp2007,40 = Date2007 + GenerationY + Wrinkles2007
Data are cross-section, both date and wrinkles have changed:
same person︷ ︸︸ ︷ppp2007,40 − ppp1992,25 = ∆Date +
=0︷ ︸︸ ︷∆Generation +∆Wrinkles
Song and Yang China’s Saving Rate
![Page 37: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/37.jpg)
Growth Decomposition
Friedman-definition “permanent income”: Avg for “similar” people
For person age 25 in 1992:
ppp1992,25 = Date1992 + GenerationY + Wrinkles1992
For person age 25 in 2007:
ppp2007,25 = Date2007 + GenerationZ + Wrinkles2007
For person age 40 in 2007
ppp2007,40 = Date2007 + GenerationY + Wrinkles2007
Data are cross-section, both date and wrinkles have changed:
same person︷ ︸︸ ︷ppp2007,40 − ppp1992,25 = ∆Date +
=0︷ ︸︸ ︷∆Generation +∆Wrinkles
Song and Yang China’s Saving Rate
![Page 38: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/38.jpg)
Why It Matters for Consumption
LC/PIH says C is based on expectations about lifetime income
Perfect foresight infinite horizon constant growth:
Ct = (r − ρ−1(r − ϑ))(Bt + Ht)
Ht =Pt
r − γ
Summers (1981)/Tobin (1967): Human Wealth effect is huge(n.b.: If r < γ, Ht =∞)
Song and Yang China’s Saving Rate
![Page 39: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/39.jpg)
Why It Matters for Consumption
LC/PIH says C is based on expectations about lifetime income
Perfect foresight infinite horizon constant growth:
Ct = (r − ρ−1(r − ϑ))(Bt + Ht)
Ht =Pt
r − γ
Summers (1981)/Tobin (1967): Human Wealth effect is huge(n.b.: If r < γ, Ht =∞)
Song and Yang China’s Saving Rate
![Page 40: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/40.jpg)
Why It Matters for Consumption
LC/PIH says C is based on expectations about lifetime income
Perfect foresight infinite horizon constant growth:
Ct = (r − ρ−1(r − ϑ))(Bt + Ht)
Ht =Pt
r − γ
Summers (1981)/Tobin (1967): Human Wealth effect is huge(n.b.: If r < γ, Ht =∞)
Song and Yang China’s Saving Rate
![Page 41: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/41.jpg)
Big Problem: G ↑⇒ S ↑
Cross-section: Modigliani (1970s, 1986)
Granger-causality: Carroll and Weil (1994), Attanasio et al(2000), Rodrik (2000)
Lots of other papers now (cf. Gourinchas and Jeanne (2007))
More convincing: ‘Narrative approach’
Japan, Korea, Hong Kong, Taiwan, Singapore, ....
OECD countries post-1974
Japan post-1990
Song and Yang China’s Saving Rate
![Page 42: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/42.jpg)
Big Problem: G ↑⇒ S ↑
Cross-section: Modigliani (1970s, 1986)
Granger-causality: Carroll and Weil (1994), Attanasio et al(2000), Rodrik (2000)
Lots of other papers now (cf. Gourinchas and Jeanne (2007))
More convincing: ‘Narrative approach’
Japan, Korea, Hong Kong, Taiwan, Singapore, ....
OECD countries post-1974
Japan post-1990
Song and Yang China’s Saving Rate
![Page 43: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/43.jpg)
Big Problem: G ↑⇒ S ↑
Cross-section: Modigliani (1970s, 1986)
Granger-causality: Carroll and Weil (1994), Attanasio et al(2000), Rodrik (2000)
Lots of other papers now (cf. Gourinchas and Jeanne (2007))
More convincing: ‘Narrative approach’
Japan, Korea, Hong Kong, Taiwan, Singapore, ....
OECD countries post-1974
Japan post-1990
Song and Yang China’s Saving Rate
![Page 44: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/44.jpg)
Big Problem: G ↑⇒ S ↑
Cross-section: Modigliani (1970s, 1986)
Granger-causality: Carroll and Weil (1994), Attanasio et al(2000), Rodrik (2000)
Lots of other papers now (cf. Gourinchas and Jeanne (2007))
More convincing: ‘Narrative approach’
Japan, Korea, Hong Kong, Taiwan, Singapore, ....
OECD countries post-1974
Japan post-1990
Song and Yang China’s Saving Rate
![Page 45: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/45.jpg)
Big Problem: G ↑⇒ S ↑
Cross-section: Modigliani (1970s, 1986)
Granger-causality: Carroll and Weil (1994), Attanasio et al(2000), Rodrik (2000)
Lots of other papers now (cf. Gourinchas and Jeanne (2007))
More convincing: ‘Narrative approach’
Japan, Korea, Hong Kong, Taiwan, Singapore, ....
OECD countries post-1974
Japan post-1990
Song and Yang China’s Saving Rate
![Page 46: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/46.jpg)
Big Problem: G ↑⇒ S ↑
Cross-section: Modigliani (1970s, 1986)
Granger-causality: Carroll and Weil (1994), Attanasio et al(2000), Rodrik (2000)
Lots of other papers now (cf. Gourinchas and Jeanne (2007))
More convincing: ‘Narrative approach’
Japan, Korea, Hong Kong, Taiwan, Singapore, ....
OECD countries post-1974
Japan post-1990
Song and Yang China’s Saving Rate
![Page 47: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/47.jpg)
Escape? Modigliani
Suppose aggregate growth has no effect on individual growth
Compare two countries:
A has zero pty growth
C has 8 percent pty growth
Compare two individuals in those countries:
Age 60 in 2010
60-year-olds in both have same income they did at age 25
25-year-olds in both countries expect same growth that25-year-olds expected in 1975
Agg growth all comes from higher level of initial income uponentry at 25
Song and Yang China’s Saving Rate
![Page 48: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/48.jpg)
Escape? Modigliani
Suppose aggregate growth has no effect on individual growth
Compare two countries:
A has zero pty growth
C has 8 percent pty growth
Compare two individuals in those countries:
Age 60 in 2010
60-year-olds in both have same income they did at age 25
25-year-olds in both countries expect same growth that25-year-olds expected in 1975
Agg growth all comes from higher level of initial income uponentry at 25
Song and Yang China’s Saving Rate
![Page 49: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/49.jpg)
Escape? Modigliani
Suppose aggregate growth has no effect on individual growth
Compare two countries:
A has zero pty growth
C has 8 percent pty growth
Compare two individuals in those countries:
Age 60 in 2010
60-year-olds in both have same income they did at age 25
25-year-olds in both countries expect same growth that25-year-olds expected in 1975
Agg growth all comes from higher level of initial income uponentry at 25
Song and Yang China’s Saving Rate
![Page 50: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/50.jpg)
Escape? Modigliani
Suppose aggregate growth has no effect on individual growth
Compare two countries:
A has zero pty growth
C has 8 percent pty growth
Compare two individuals in those countries:
Age 60 in 2010
60-year-olds in both have same income they did at age 25
25-year-olds in both countries expect same growth that25-year-olds expected in 1975
Agg growth all comes from higher level of initial income uponentry at 25
Song and Yang China’s Saving Rate
![Page 51: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/51.jpg)
Escape? Modigliani
Suppose aggregate growth has no effect on individual growth
Compare two countries:
A has zero pty growth
C has 8 percent pty growth
Compare two individuals in those countries:
Age 60 in 2010
60-year-olds in both have same income they did at age 25
25-year-olds in both countries expect same growth that25-year-olds expected in 1975
Agg growth all comes from higher level of initial income uponentry at 25
Song and Yang China’s Saving Rate
![Page 52: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/52.jpg)
Escape? Modigliani
Suppose aggregate growth has no effect on individual growth
Compare two countries:
A has zero pty growth
C has 8 percent pty growth
Compare two individuals in those countries:
Age 60 in 2010
60-year-olds in both have same income they did at age 25
25-year-olds in both countries expect same growth that25-year-olds expected in 1975
Agg growth all comes from higher level of initial income uponentry at 25
Song and Yang China’s Saving Rate
![Page 53: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/53.jpg)
Escape? Modigliani
Suppose aggregate growth has no effect on individual growth
Compare two countries:
A has zero pty growth
C has 8 percent pty growth
Compare two individuals in those countries:
Age 60 in 2010
60-year-olds in both have same income they did at age 25
25-year-olds in both countries expect same growth that25-year-olds expected in 1975
Agg growth all comes from higher level of initial income uponentry at 25
Song and Yang China’s Saving Rate
![Page 54: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/54.jpg)
Implied Cross-Section of (Lifetime) Income By Age
� A
� C
25 30 35 40 45 50 55 60Age
0.2
0.4
0.6
0.8
1.0Income
Cross Section Age�Earnings Profile
Song and Yang China’s Saving Rate
![Page 55: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/55.jpg)
Problem: Modigliani/Friedman ⇒ C = P
Song and Yang China’s Saving Rate
![Page 56: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/56.jpg)
Problem: Modigliani/Friedman ⇒ C = P
Song and Yang China’s Saving Rate
![Page 57: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/57.jpg)
Simplest Alternative: It’s all date effects⇒ similar cross-section age-income across countries
Empirically, roughly true (certainly better than Modigliani)
Song and Yang China’s Saving Rate
![Page 58: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/58.jpg)
Simplest Alternative: It’s all date effects⇒ similar cross-section age-income across countries
Empirically, roughly true (certainly better than Modigliani)
Song and Yang China’s Saving Rate
![Page 59: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/59.jpg)
Simplest Alternative: It’s all date effects⇒ similar cross-section age-income across countries
Empirically, roughly true (certainly better than Modigliani)
Song and Yang China’s Saving Rate
![Page 60: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/60.jpg)
Does Precautionary Saving Change Things?
No. Carroll and Toche (2009):
a ≈(
1
(γ − r) + ϑ(1 + (γ/f)(1− (γ/f)ω))
)(1)
and staring at this (or solving models) convinces you thatγ ↑⇒ a ↓ (Summers was right)
... but if growth increases are always accompanied by increases inf, then maybe ...
Carroll and Jeanne (2009)
Sandri (2009)
Song and Yang China’s Saving Rate
![Page 61: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/61.jpg)
Does Precautionary Saving Change Things?
No. Carroll and Toche (2009):
a ≈(
1
(γ − r) + ϑ(1 + (γ/f)(1− (γ/f)ω))
)(1)
and staring at this (or solving models) convinces you thatγ ↑⇒ a ↓ (Summers was right)
... but if growth increases are always accompanied by increases inf, then maybe ...
Carroll and Jeanne (2009)
Sandri (2009)
Song and Yang China’s Saving Rate
![Page 62: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/62.jpg)
Does Precautionary Saving Change Things?
No. Carroll and Toche (2009):
a ≈(
1
(γ − r) + ϑ(1 + (γ/f)(1− (γ/f)ω))
)(1)
and staring at this (or solving models) convinces you thatγ ↑⇒ a ↓ (Summers was right)
... but if growth increases are always accompanied by increases inf, then maybe ...
Carroll and Jeanne (2009)
Sandri (2009)
Song and Yang China’s Saving Rate
![Page 63: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/63.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 64: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/64.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 65: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/65.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 66: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/66.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 67: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/67.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 68: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/68.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 69: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/69.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 70: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/70.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 71: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/71.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 72: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/72.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 73: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/73.jpg)
Authors’ story: China is Modigliani on Steriods!
Show clockwise rotation in cross-section profile in ChinaCurrent 25-year-olds
Much higher income level than their parents hadSimilar income at 25 to current 55-year-oldsBut expect worse income growth than their parents expectedShould show implied beliefs about absolute income growthover lifetime, not cross-section
Case:
Pension system phase-outHealth care system privatizedNo kids to take care of youPeople just look to older HHs, don’t think about growth
Song and Yang China’s Saving Rate
![Page 74: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/74.jpg)
Assessment
I don’t buy it
Unexplained: Why does this always happen?
Japan, Korea, Hong Kong, Taiwan, Singapore, ... now ChinaAge/income profile always rotates? Not likely ...
Leaves high absolute level of Chinese saving rates unexplained
Song and Yang China’s Saving Rate
![Page 75: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/75.jpg)
Assessment
I don’t buy it
Unexplained: Why does this always happen?
Japan, Korea, Hong Kong, Taiwan, Singapore, ... now ChinaAge/income profile always rotates? Not likely ...
Leaves high absolute level of Chinese saving rates unexplained
Song and Yang China’s Saving Rate
![Page 76: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/76.jpg)
Assessment
I don’t buy it
Unexplained: Why does this always happen?
Japan, Korea, Hong Kong, Taiwan, Singapore, ... now ChinaAge/income profile always rotates? Not likely ...
Leaves high absolute level of Chinese saving rates unexplained
Song and Yang China’s Saving Rate
![Page 77: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/77.jpg)
Assessment
I don’t buy it
Unexplained: Why does this always happen?
Japan, Korea, Hong Kong, Taiwan, Singapore, ... now ChinaAge/income profile always rotates? Not likely ...
Leaves high absolute level of Chinese saving rates unexplained
Song and Yang China’s Saving Rate
![Page 78: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/78.jpg)
Assessment
I don’t buy it
Unexplained: Why does this always happen?
Japan, Korea, Hong Kong, Taiwan, Singapore, ... now ChinaAge/income profile always rotates? Not likely ...
Leaves high absolute level of Chinese saving rates unexplained
Song and Yang China’s Saving Rate
![Page 79: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/79.jpg)
Patrick Henry, Thomas Sargent, and Economic Man
“I know no way of predicting the future but by the past” – PatrickHenrySargent: Model expectations as coming from regression analysis ofpast dataLaibson et al (current JEP): “Natural Expectations”Authors: “Myopic expectations” – need to go further
Song and Yang China’s Saving Rate
![Page 80: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/80.jpg)
Patrick Henry, Thomas Sargent, and Economic Man
“I know no way of predicting the future but by the past” – PatrickHenrySargent: Model expectations as coming from regression analysis ofpast dataLaibson et al (current JEP): “Natural Expectations”Authors: “Myopic expectations” – need to go further
Song and Yang China’s Saving Rate
![Page 81: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/81.jpg)
Patrick Henry, Thomas Sargent, and Economic Man
“I know no way of predicting the future but by the past” – PatrickHenrySargent: Model expectations as coming from regression analysis ofpast dataLaibson et al (current JEP): “Natural Expectations”Authors: “Myopic expectations” – need to go further
Song and Yang China’s Saving Rate
![Page 82: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/82.jpg)
Patrick Henry, Thomas Sargent, and Economic Man
“I know no way of predicting the future but by the past” – PatrickHenrySargent: Model expectations as coming from regression analysis ofpast dataLaibson et al (current JEP): “Natural Expectations”Authors: “Myopic expectations” – need to go further
Song and Yang China’s Saving Rate
![Page 83: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/83.jpg)
Patrick Henry, Thomas Sargent, and Economic Man
“I know no way of predicting the future but by the past” – PatrickHenrySargent: Model expectations as coming from regression analysis ofpast dataLaibson et al (current JEP): “Natural Expectations”Authors: “Myopic expectations” – need to go further
Song and Yang China’s Saving Rate
![Page 84: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/84.jpg)
Precautionary Saving?
Carroll and Jeanne (2009) Chamon, Prasad, and Liu (2010):
Big increase in precautionary saving
Effective phasing out of pensionsEffective privatization of health careUncertain political/economic future
Even so:
ρ ≈ 5
β ≈ 1
Song and Yang China’s Saving Rate
![Page 85: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/85.jpg)
Precautionary Saving?
Carroll and Jeanne (2009) Chamon, Prasad, and Liu (2010):
Big increase in precautionary saving
Effective phasing out of pensionsEffective privatization of health careUncertain political/economic future
Even so:
ρ ≈ 5
β ≈ 1
Song and Yang China’s Saving Rate
![Page 86: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/86.jpg)
Precautionary Saving?
Carroll and Jeanne (2009) Chamon, Prasad, and Liu (2010):
Big increase in precautionary saving
Effective phasing out of pensionsEffective privatization of health careUncertain political/economic future
Even so:
ρ ≈ 5
β ≈ 1
Song and Yang China’s Saving Rate
![Page 87: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/87.jpg)
Precautionary Saving?
Carroll and Jeanne (2009) Chamon, Prasad, and Liu (2010):
Big increase in precautionary saving
Effective phasing out of pensionsEffective privatization of health careUncertain political/economic future
Even so:
ρ ≈ 5
β ≈ 1
Song and Yang China’s Saving Rate
![Page 88: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/88.jpg)
Precautionary Saving?
Carroll and Jeanne (2009) Chamon, Prasad, and Liu (2010):
Big increase in precautionary saving
Effective phasing out of pensionsEffective privatization of health careUncertain political/economic future
Even so:
ρ ≈ 5
β ≈ 1
Song and Yang China’s Saving Rate
![Page 89: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/89.jpg)
Precautionary Saving?
Carroll and Jeanne (2009) Chamon, Prasad, and Liu (2010):
Big increase in precautionary saving
Effective phasing out of pensionsEffective privatization of health careUncertain political/economic future
Even so:
ρ ≈ 5
β ≈ 1
Song and Yang China’s Saving Rate
![Page 90: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/90.jpg)
Precautionary Saving?
Carroll and Jeanne (2009) Chamon, Prasad, and Liu (2010):
Big increase in precautionary saving
Effective phasing out of pensionsEffective privatization of health careUncertain political/economic future
Even so:
ρ ≈ 5
β ≈ 1
Song and Yang China’s Saving Rate
![Page 91: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/91.jpg)
Precautionary Saving?
Carroll and Jeanne (2009) Chamon, Prasad, and Liu (2010):
Big increase in precautionary saving
Effective phasing out of pensionsEffective privatization of health careUncertain political/economic future
Even so:
ρ ≈ 5
β ≈ 1
Song and Yang China’s Saving Rate
![Page 92: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/92.jpg)
Precautionary Saving?
Carroll and Jeanne (2009) Chamon, Prasad, and Liu (2010):
Big increase in precautionary saving
Effective phasing out of pensionsEffective privatization of health careUncertain political/economic future
Even so:
ρ ≈ 5
β ≈ 1
Song and Yang China’s Saving Rate
![Page 93: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/93.jpg)
Habits (Carroll, Overland, and Weil (2000))
Habits + Precautionary
Political economy (?)
Corporate governance (?)
...
Song and Yang China’s Saving Rate
![Page 94: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/94.jpg)
Habits (Carroll, Overland, and Weil (2000))
Habits + Precautionary
Political economy (?)
Corporate governance (?)
...
Song and Yang China’s Saving Rate
![Page 95: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/95.jpg)
Habits (Carroll, Overland, and Weil (2000))
Habits + Precautionary
Political economy (?)
Corporate governance (?)
...
Song and Yang China’s Saving Rate
![Page 96: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/96.jpg)
Habits (Carroll, Overland, and Weil (2000))
Habits + Precautionary
Political economy (?)
Corporate governance (?)
...
Song and Yang China’s Saving Rate
![Page 97: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/97.jpg)
Habits (Carroll, Overland, and Weil (2000))
Habits + Precautionary
Political economy (?)
Corporate governance (?)
...
Song and Yang China’s Saving Rate
![Page 98: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/98.jpg)
A Big Question
Very valuable new data
Much work remains to be done
Song and Yang China’s Saving Rate
![Page 99: Life Cycle Earnings in a Fast-Growing Economy › people › ccarroll › Courses › 606 › ...Life Cycle Earnings in a Fast-Growing Economy Zheng Michael Song Dennis Tao Yang Discussion](https://reader034.vdocument.in/reader034/viewer/2022042407/5f21078f3e2ad650b720065e/html5/thumbnails/99.jpg)
A Big Question
Very valuable new data
Much work remains to be done
Song and Yang China’s Saving Rate