What drives the savings rate in middle -income countries?

The aim of this study is to examine the factors that influence the savings rate in middle-income countries and to compare the results with other studies devoted to different subgroups of countries. Among the potential determinants of savings the study considers: demography, income level, financial sector, international trade, inflation and the structure of the economy. The research sample is confined to 44 middle-income countries and covers the period between 2000 and 2019. Six model specifications are constructed using three different estimators: FE, FGLS and PCSE. In the next step, the same models are estimated using alternative dependent variables. Results suggest that industrial share in GDP has a positive impact on the savings rate. On the other hand, a negative relationship was diagnosed between the savings and unemployment rates, the share of labour compensation in GDP, military expenditure, inflation and the young dependency ratio.