Household Savings Behavior in the Developing Economies: The Indonesian Case

Abstract

Econometric research on the determinants of household saving based on micro data drawn from the less developed countries has lagged far behind the pace set in advanced nations. It would appear that there has been limited hypothesis-testing in the LDC's beyond macro formulations of the consumption function. Furthermore, very little of the development litera- ture attempts to isolate the impact of structural change on aggregate personal saving, since few studies provide meaningful disaggregation. This state of affairs seems paradoxical, given the currency of W. A. Lewis's remark that the central problem in development theory is to explain an increase in domestic saving from 4 or 5 percent of national income to 12 or 15 percent....