The Japanese saving rate between 1960 and 2000: productivity, policy changes, and demographics

In this paper, we use an overlapping generations model to study the factors generating the saving rate in Japan between 1960-2000. The model economy allows for observed aging of the population, total factor productivity (TFP), and fiscal policy to affect the national saving rate. Our calibrated general equilibrium setup generates saving rates that are reasonably similar to the data during this period. Our counterfactual experiments indicate that observed TFP growth rates are the main reason for both the secular decline and the two humps in the saving rate during 1960-2000.