A Theoretical Analysis And Empirical Tests Of The Precautionary Savings Of Chinese Residents

It has been a long practice for economists to view the saving issue as the other side of consumption and hence, treat it as the accessory or by-product of studies on consumption. Since the theory of precautionary saving came out in the 1970s, there have been more and more discussions and studies specialized on saving issues and they are getting more systematic and deeper. Driven by the precautionary saving theories, saving has gradually become a relatively independent research area. However, the controversy over precautionary saving remains in the academic circle. The focus of such controversy has shifted from the debates over the existence of precautionary saving behavior to those on the effects of precautionary motives on consumption behavior and the aggregate saving. The first reason to cause such a shift is that the theoretical foundation of precautionary saving has been recognized and empirical studies have found enough support for its existence. The second is that as for the importance of precautionary motives, there has no agreed answer, not even an answer close to agreement. Therefore, it will surely provide valuable basis for the development of the theory to investigate the importance of precautionary motives through empirical analysis.The buffer-stock theory is an important stream of precautionary saving theories. It has made outstanding contributions to the development of precautionary saving theories. It has many implications different from the standard Life Cycle Hypothesis and Permanent Income Hypothesis and thus provides a valuable framework for future research. It also puts forward logical explanations to a few facts that are still unable to be explained, up to now, by the classical consumption models. However, for the scholars in China, the cognition of the buffer-stock theory still remains at a superficial level of only providing simple theoretical introduction to it. A finer depiction and empirical application of it will not only facilitate studies on the related theories in China but also do great benefit to the development of the buffer-stock theory itself because China is admittedly one of the...