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Savings rates and economic performance of countries

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aervew posted on Thu, Aug 30 2012 10:36 PM

Austrians often rave about the importance of savings in economic growth. But look at a number of current big savers - Ireland, Spain, France. Pretty bad, the first two abysmal even, despite having high savings rates throughout the boom and bust years.

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Bogart replied on Thu, Aug 30 2012 11:16 PM

These rates are for households and there does not seem to be an adjustment for govenrment interest and principal payments.  These two values would reduce the savings rates for individuals.

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Are you kidding me?  Ireland and Spain both had government induced housing bubbles.  France has a hugely restricted labour market.  Those three countries all have profligate states controlling them - what does the saving of households matter if the state just keeps spending regardless?

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Look at Singapore: one of the highest savings rates in the world (mandatory savings of around 35% of income), and in spite of having one of the highest PPP GDPs per capita in the world, it's still growing at around 5% per annum. Of course, the lack of a capital gains tax (and a total tax rate that is less than 15% of GDP) probably helps too.

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