The Theoretical Research and Empirical Analysis on the Relationship between Interest Rates and Household Savings

Abstract

The ideas of cutting down interest rates to curb savings and promoting consumption is important for the implementation of macroeconomic policies. This paper establishes savings rate regression model and analyses the influence of interest rates on China's household savings since 1988. The study has found the impact of interest rates on household savings is uncertain, so it will be over-simplified if you only hope that cutting interest rates will achieve suppression savings and stimulate consumption. The paper also puts forward some relevant policy recommendations in order to play a role in China's consumption growth and economic development.