China
Singapore
40
India Malaysia
Indonesia
Korea
30
EMG
Bangladesh LATAM EMG
H.K.
20
Non-EMG LDC
Philippines Pakistan
10
-4 -3 -2 -1 0 1 2 3
Real interest rate (%)
Concluding Remarks
Baseline estimations generally affirm the
positive effect of r on private saving
The impact of the real interest rate on private
saving changes when the nominal interest rate
is below a relatively low level
Conditions such as output volatility, old
dependency ratio, and financial development
affect the impact of r on private saving
Concluding Remarks
Extremely high levels of output volatility could
make the interest rate effect negative
When the real interest rate is below 1.5%,
greater output volatility would lead to higher
private saving in developing countries
In economies with high levels of old
dependency, the income effect associated with
a low interest rate dominates
The same applies to economies w/ well-
developed financial markets
Concluding Remarks
Low-interest rate policies adopted by AEs to stimulus
their economies can yield contractionary effects on
developing countries through encouraging saving and
reducing consumption
Many of Asian economies are characterized by
relatively well-developed financial markets, and some of
these economies are also experiencing rapidly ageing
populations lower r can contribute to higher p. saving
An active low-interest rate policy in AEs can contribute
to keeping global imbalances perennial
Thank you!