Mathematical relationship and empirical analysis of household savings and inflation

LI Jun1

(1.Institute of Quantitative & Technical Economics, Chinese Academy of Social Sciences)

【Abstract】This paper focuses on researching the effects of inflation on the household savings from two aspects of theoretical study and empirical study. Firstly, this paper builds a mathematical model based on the life-cycle hypothesis, thus establishes the mechanism between the household savings and the inflation factors. Secondly, it proves strictly the positive relationship between household savings rate and inflation rate by using the established model. Lastly, an empirical analysis is made on the numerical relationship between household savings rate and inflation rate by the Chinese statistical data from 1978 to 2013. The results show that inflation has a positive effect on household savings in the long run.

【Keywords】 household savings; inflation; life-cycle; mathematical model;


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    [1]. ① Supported by the innovative project “Theoretical and empirical research on the economic growth effect of population aging” in the Institute of Quantitative & Technical Economics of the Chinese Academy of Social Sciences, and the key project of Philosophy and Social Sciences Research of the Ministry of Education (13JZD005). [^Back]

    [2]. ① Actual income growth rate is the growth rate which is calculated by comparable price after the inflation factor is removed. [^Back]

    [3]. ① For the discussion of Equation (6), see Li, J. & Liu, S. Academic Research (学术研究), (10) (2014). [^Back]

    [4]. ① The actual annual growth rate of per capita GDP was calculated according to the Table 3-1 of China Statistical Yearbook (2014). The actual average annual growth rate of per capita disposable income of urban residents and the actual average annual growth rate of per capita net income of rural residents were calculated according to the Table 6-4 of China Statistical Yearbook (2014). The average annual growth rate of inflation was calculated according to Table 5-2 of China Statistical Yearbook (2014). [^Back]


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This Article


CN: 11-1087/F

Vol 33, No. 04, Pages 95-107

April 2016


Article Outline


  • 1 Literature review
  • 2 Household savings mathematical model based on life-cycle theory
  • 3 Mathematical proof of the positive relationship between personal savings rate and inflation rate
  • 4 An empirical analysis of the relationship between household savings rate and inflation rate in china
  • 5 Main conclusions
  • Footnote