The loosening of the one-child policy will transform China’s demographic development in coming years, but it also runs the risk of lowering China’s high rate of personal savings. This column argues that high estimates of the magnitude of this response may be overstated. There are multiple channels at play, and predictions of a large response in savings do not account for general equilibrium effects.
Abhijit Banerjee, Xin Meng, Tommaso Porzio, Nancy Qian, 04 September 2014
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