Başkaya, Y. S. and T. Hülagü, 2011, “Informal-Formal Worker Wage Gap in Turkey: Evidence From A Semi-Parametric Approach,” Central Bank of the Republic of Turkey Working Paper 11/15.
Carroll, C. D. and D. N. Weil, 1994, “Saving and Growth: A Reinterpretation,” Carnegie-Rochester Conference Series on Public Policy 40, pp. 133–192.
IMF, 2007, “Safe to Save Less? Assessing the Recent Decline in Turkey’s Private Saving Rate” IMF Country Report No. 07/364 (Washington: International Monetary Fund).
Matur, E. P., Sabuncu, A. and S. Bahçeci, 2012, “Determinants of Private Savings and Interaction Between Public and Private Savings in Turkey,” Topics in Middle Eastern and North African Economies 14, pp. 102–125.
Özel, Ö. and C. Yalçın, 2012, “Private Pension Plans and Domestic Savings with Special Emphasis on the Turkish Case,” Unpublished draft.
World Bank, 2012, “Sustaining High Growth: The Role of Domestic Savings,” Turkey Country Economic Memorandum, Report #66301-TR (Washington: World Bank).
Prepared by Jacques Miniane (EUR)
In other words, the decline in the standard definition of savings stemmed in part from rapid increases in durables consumption which outpaced overall consumption.
The exact quantitatite contribution of each factor to the decline in savings varies from study to study, because of differing sample periods, methods, etc.
The offset is not so clear-cut before 2003, but high inflation in the 1990s and early 2000’s complicates the proper disaggregation between public and private savings (as inflation is implicitly a tax on private savings that benefits the government). While measures of inflation-adjusted public/private savings exist, they are imperfect at best.
Post-2009, the global recovery and normalization of financial conditions are behind the recovery and resumption of credit in the Turkish economy, contributing to higher public savings and lower private savings.
Lack of full Ricardian equivalence makes sense in Turkey, given the large number of liquidity constrained households among other things.
Since 2005, credit as a share of GDP has increased by some 30 percentage points. Needless to say, this should not mean that more credit is always a good thing.
One should mention here important factors that boosted savings during this period. Chief among these was higher growth in income per capita, consistent with evidence from other regions (see Carroll and Weil, 1994) that, in growth accelerating episodes, higher growth precedes and statistically causes higher savings, and not the other way around. Also, note that Matur et al. (2012) included both the level of income and its growth and found a positive effect on savings from the former but a negative effect from the latter.
Strong consumption (including of durables) contributed to the large deterioration in private savings over the last three years, and in this sense it contributed to the widening of the current account deficit as much as investment did. However, higher public savings compensated for the decline in private savings over this period, so viewed from an S-I perspective the rise in investment fully explains the deterioration in the current account.
This is, again, the Carroll and Weil (1994) view of the world. Note that these authors rationalized the increase in savings during episodes of rapid income growth with the existence of habits in consumption.
Private pension accounts have not been very popular in Turkey.