8/2007 Dmitry Kulikov, Annika Paabut ja Karsten Staehr. A microeconometric analysis of household saving in Estonia: Income, wealth and financial exposure

Working Papers of Eesti Pank. No 8/2007

This paper ascertains the determinants of household saving in Estonia based on a microeconometric analysis of household budget surveys from 2002 to 2005. Higher income leads to more saving, but the effect is largest for unanticipated income shocks. Ownership of real estate does not affect saving, while possession of durable goods like cars is associated with lower savings. A number of variables reflecting the households' financial exposure are of importance. Deposits, other forms of financial assets and access to liquidity reduce household saving. Surprisingly, debt and leasing liabilities and existing debt servicing payments also lead to lower savings. Young and in particular older households have a higher propensity to save than middle-aged households, while higher education is associated with lower savings. The results are robust to changes in the specification of the saving measure and the choice of estimation method.
JEL Code: D12, D14, D22
Key words: : household saving, saving hypotheses, financial exposure

* The authors would like to thank Jana Kask, Martti Randveer, David G. Mayes and seminar participants at Eesti Pank for useful comments and suggestions. The authors would also like to thank Statistics Estonia for granting access to the Estonian Household Budget Survey and gratefully acknowledge the help of Mari Kreitzberg and Merle Paats in preparing the dataset and in the resolution of other data-related issues.

Authors' e-mail addresses: dmitry.kulikov [at] epbe.ee, annika.paabut [at] epbe.ee, karsten.staehr [at] epbe.ee

The views expressed are those of the authors and do not necessarily represent the official views of Eesti Pank.


1. Introduction
2. Saving, wealth and financial exposure in Estonia
3. Data and variables
4. Empirical implementation and results
5. Robustness
6. Sub-samples
7. Final comments
Appendix 1. Descriptive statistics of variables

Microeconometric Analysis of Household Saving in Estonia: Income, Wealth and Financial Exposure, Working Papers of Eesti Pank No 8/2007 (PDF*)

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