Determinants of Private Saving Level: Evidence from Turkey

Abstract

This paper attempts to ascertain the determinants of private saving level in Turkey. We implemented OLS estimations and constructed a VEC model in order to circumvent possible endogeneity bias. Dataset was acquired from the World Bank, Turkish Central Bank and Turkish Statistical Institute. The period examined is from 1988 to 2010. This research found that a) private and public saving rates are partly complementary to each other; b) higher inflation rates and lower levels of social security tend to increase private saving rate because of higher uncertainty; c) easing credit constraints tends to decrease private saving; d) favorable terms of trade promote private saving by increasing income; and e) current account balance influence private saving positively.