Why are saving rates in the East Asian countries so high? This paper represents an attempt to provide an explanation in terms of rapid income growth rates linked to the life cycle hypothesis under the modification that consumption standards rise as income does, and that they continue to rise well beyond the consumer's retirement age. Empirical tests support the relationship between saving rates and growth implied by the theory. This approach goes a long way toward explaining high saving rates in East Asia. Copyright Springer-Verlag Berlin Heidelberg 2003Key words: Life Cycles, Saving, Growth, Relative Income., JEL classification: G11,
This letter puts forward a recursive version of the Engle and Granger cointegration test, using the Kalman filter, for the analysis of fiscal equilibrium in the Dominican Republic. The method employs a time-varying-coefficient augmented Dickey and Fuller test and finds that government income and spending display movements both toward and away from equilibrium that can be associated to various policy reforms and shocks to the economy.
This paper analyses the impact of policy misalignments and structural reform policies on credibility and the long-term success of an exchange rate based (ERB) stabilization programme to reduce inflationary inertia. A controlled signal state-space model is used to test this hypothesis for the Dominican Republic, a country that introduced an ERB programme in the early 1990s. The results indicate that fiscal and monetary malpractice will deteriorate credibility whereas structural reform policies, when perceived as beneficial, will enhance credibility, contributing to economic stability.
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