Life-Cycle Hypothesis in Asia:What Went Right

Abstract

This paper examines the Life Cycle Hypothesis in the light of the Asian experience during the period 1970-2009 using the dynamic panel analysis. Over this period, rates of private sector in these economies have risen steadily and are presently among the highest in the world. Several conclusions emerge clearly from the estimation results: private saving rates rises with the rate of growth of GDP and disposable income. Demographic factor (dependency ratio) is an important determinant of private saving rates, an increase in dependency ratio, will be offset by a decline in the proportion of those under the age of 15-65. Therefore, the net effect could be negative.