Working Paper: NBER ID: w16000
Authors: Qingyuan Du; Shangjin Wei
Abstract: Large savings and current account surpluses by China and other countries are said to be a contributor to the global current account imbalances and possibly to the recent global financial crisis. This paper proposes a theory of excess savings based on a major, albeit insufficiently recognized by macroeconomists, transformation in many of these societies, namely, a steady increase in the surplus of men relative to women. We construct an OLG model with two sexes and a desire to marry. We show conditions under which an intensified competition in the marriage market can induce men to raise their savings rate, and produce a rise in the aggregate savings and current account surplus. This effect is economically significant if the biological desire to have a partner of the opposite sex is strong. A calibration of the model suggests that this factor could generate economically significant current account responses, or more than 1/2 of the actual current account imbalances observed in the data.
Keywords: current account imbalances; savings; gender imbalance; marriage market
JEL Codes: E21; F32; F41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| gender imbalance in marriage markets (J12) | savings rates among men (D14) |
| savings rates among men (D14) | current account surpluses (F32) |
| gender imbalance in marriage markets (J12) | current account surpluses (F32) |