Original scientific paper
https://doi.org/10.15179/ces.22.2.3
A Re-examination of the Validity of the Life Cycle Hypothesis (LCH): Evidence from Emerging Europe
Mehmed Ganic
orcid.org/0000-0003-1919-1321
; Department of Economics and Management, International University of Sarajevo, Sarajevo, Bosnia and Herzegovina
Agim Mamuti
; Department of Applied Economics and Entrepreneurship, Mother Teresa University, Skopje, North Macedonia
Abstract
The study aims to empirically explore the dependence of savings behavior on demographic changes in the context of the life cycle hypothesis (LCH) in a sample of 18 European transition and post-transition countries. The empirical methodology is based on a multifactor modeling approach. The research estimates heterogeneous panel data models by employing three different heterogeneous coefficient estimators: mean group (MG) estimator, common correlated effects mean group (CCEMG) estimator, and augmented mean group (AMG) estimator. The findings demonstrate that the LCH is confirmed in the case of European post-transition countries and rejected as inappropriate in European transition countries due to inconsistency of regression coefficients (age dependency, unemployment rate, urbanization, and health expenditure). The models and their findings presented in this study can be used in policymaking to predict dynamic interactions and variations among selected demographic variables in the determination of savings behavior.
Keywords
age dependency; savings behavior; the life cycle theory; emerging Europe; dynamic heterogeneous panel data models
Hrčak ID:
248398
URI
Publication date:
22.12.2020.
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