| This thesis examines some of the demographic and institutional influences on Canadian savings behavior over the last century. Since 1870, the Canadian savings rate has risen from less than ten percent of GNP, to over fifteen percent of GNP just prior to the First World War, then to over twenty percent of GNP after the Second World War. During this period, Canada changed from being a country of net emigration, to one that experienced mass immigration in the years immediately preceding WWI, and also after both World Wars. Real incomes also rose dramatically over the last century as Canada became an industrialized nation, and the Canadian financial system expanded and matured.; Using a cointegration approach, I show that the Canadian savings rate transition was driven by increases in real income and increases in the working age population. Contrary to recent work, there is no significant evidence to support a child dependency burden on savings for Canada over the last century.; I then construct a dynamic general equilibrium model and calibrate the model to match Canadian demographic and economic characteristics over 1861--1913. Model results suggest that up to three-quarters of the increase in the capital formation rate and the foreign capital inflow rate, and all of the increase in the domestic savings rate, in Canada over 1899--1911, can be attributed to the dramatic inflow of migrants over this period.; Finally, a closer look at the evidence in the years leading up to WWI suggests the timing and magnitude of the changes in asset accumulation in the financial sector correspond closely with those of the Canadian savings rate, supporting the view that financial intermediation must have played an important role in facilitating the rise in the Canadian savings rate. However, the primary driving force in the expansion of financial intermediation was the chartered banks, which predominantly fulfilled short-term capital requirements, not long-term physical capital requirements. Causality testing indicates there exists no statistically significant causal link between improvements in the banking sector and domestic savings in Canada during the 1870--1913 period. |
