Discussion paper

DP572 Why is Italy's Savings Rate So High?

In this paper we provide an explanation for three features that characterize the Italian savings rate: by international standards, Italy is a `high-saving' country; the Italian savings rate has declined markedly in the last three decades; the correlation between saving and growth is stronger in Italy than in countries at comparable stages of economic development. We compare the size and characteristics of credit and insurance markets in the major OECD countries and argue that the strikingly low development of Italian capital markets may explain these features of savings in Italy. In the second part of the paper we provide a number of empirical tests to assess the effect of earnings uncertainty and borrowing constraints on household saving. The results suggest that capital market imperfections are the likely source of the high Italian savings rate and of the strong saving-growth correlation. We consider the potential role of the public and informal sectors, bequests and the slope of the earnings profile, but reject these as explanations of Italian savings behaviour.


Guiso, L, T Jappelli and D Terlizzese (1991), ‘DP572 Why is Italy's Savings Rate So High?‘, CEPR Discussion Paper No. 572. CEPR Press, Paris & London. https://cepr.org/publications/dp572