Saving%20and%20Investment%20Behavior%20in%0D%0ABolivia%3A%0D%0AEvidence%20from%20a%20Flow%2Dof%2DFunds%20Analysis

Technical Notes

Saving and Investment Behavior in Bolivia: Evidence from a Flow-of-Funds Analysis


CODE: IDB-TN-895
AUTHOR(s): Jemio, Luis Carlos , Nina, Osvaldo
PUBLISHED: January 2016
LANGUAGE: English
RELATED TOPICS: Macroeconomics
DOWNLOAD FILE IN: English

Abstract:

This paper analyzes sectoral saving-investment determinants in Bolivia and the role played by financial institutions in intermediating resources. For this purpose, sectoral saving-investment trends are analyzed for the last two and a half decades. Three periods are identified: i) a reform period (1990-1998), when financial credit expanded significantly; ii) a crisis period (1999-2005), characterized by a credit crunch; and iii) a boom period (2006-2012), when credit expanded at high growth rates. A flow-of-funds framework is utilized in the analysis of saving-investment behaviors of sectors and the intermediary role of the financial system. Econometric methods are used to identify the key variables that determine sectoral savings and investment. Key stylized facts are identified in connection to the adjustment rules that govern sectoral saving-investment balances. Based on the evidence, a Real-Financial Computational General Equilibrium (R-F CGE) model is calibrated in order to test the impacts of potential shocks and policies.

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