02148cas a2200265 a 4500 AALejournalIMF006924 230101c9999 xx r poo 0 0eng d 5.00 USD 9781455211708 1018-5941 BD-DhAAL BD-DhAAL Liu, Kai. Income Uncertainty and Household Savings in China / Kai Liu, Marcos Chamon, Eswar Prasad. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (34 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students China's household saving rate has increased markedly since the mid-1990s and the age-savings profile has become U-shaped. We find that rising income uncertainty and pension reforms help explain both of these phenomena. Using a panel of Chinese households covering the period 1989-2006, we document that strong average income growth has been accompanied by a substantial increase in income uncertainty. Interestingly, the permanent variance of household income remains stable while it is the transitory variance that rises sharply. A calibration of a buffer-stock savings model indicates that rising savings rates among younger households are consistent with rising income uncertainty and higher saving rates among older households are consistent with a decline in the pension replacement ratio for those retiring after 1997. We conclude that rising income uncertainty and pension reforms can account for over half of the increase in the urban household savings rate in China since the mid-1990s as well as the U-shaped age-profile of savings. Mode of access: Internet Chamon, Marcos. Prasad, Eswar. IMF Working Papers; Working Paper ; No. 2010/289 Full text available on IMF http://elibrary.imf.org/view/journals/001/2010/289/001.2010.issue-289-en.xml IMF e-Library