"Life Cycle" Hypothesis of Saving: Aggregate ... - Arabictrader.com

Table 4.3 (continued)
Period & estimation Surplus Tax Dep. Inflation Adj.
technique Constant g g 1 (GS/Y) effect LFWORK ratio correction R 2 & S.E.
12 1st diff no 0.59 0.98 0.71 -0.02 0.06 -0.64 0.88
national savings constant (1.6) (6.1) (2.3) (0.19) (0.39) (1.6) 0.020
1980s–1970s
OLS
13 1st diff no 0.93 0.64 0.90 0.61 -0.37 0.92
national savings constant (2.8) (2.7) (7.9) (3.2) (1.4) 0.016
1980s–1970s
OLS
Legend:
Absolute values of t-ratios are in parentheses. All regressions were run on period average private savings out of disposable income corrected for inflation except
where noted. The data used for the regressions in this table was obtained from the OECD National Income Accounts, OECD Economic Outlook, and International
Financial Statistics.
The explanatory variables used in these regression are defined as follows: g(g 1 ) = current (lagged) real GDP growth taken as the average rate of growth for all
years from the previous period surplus and taxes = surplus of the general government defined as “net taxes” current receipts less transfers less interest on the
debt, corrected for inflation · less government expenditures on goods and services tax effect = see note #4 LFWORK = the labor participation ratio for women
aged 25–54 dep. ratio = the percentage of the population below the age of 15 inflation correction = consumer price deflator · net public debt. For those countries
with incomplete net public debt data, the following approximation was used: (ṗ/r) · net where ṗ = consumer price deflator; r = yield on long term government
bonds; net = net interest paid on the public debt nnp.
The tax effect for the equations in which the dependent variable is adjusted private savings is computed from the following formula; tax effect = surplus coefficient
-0.15. For the regressions with national savings as the dependent variable, which include a specific tax term, the tax effect is the sum of the coefficients
on the surplus and tax variables.
124 The Life-Cycle Hypothesis