Cross-Country Saving Rates - A Percentage of GDP for Australia and China - Economics Assignment Help

Assignment Task:

1. Cross-country Saving Rates 

This question examines cross-country differences in saving rates. Please examine Figure 1, which displays the gross domestic savings as a percentage of GDP for Australia and China. The data shows that China saves a signitiomtly larger proportion of income than Australia. The rest of the question examines 'intent ial reasons for the differences. 

a) Suppose an economist was interested in comparing the saving behaviour in China to Australis. Explain why it is reasonable to divide by domestic savings by GDP when making this comparison. (/ mark) 

b) If we look at the age of the structure. both China and Australia have a similar median age. However. Australia has a slightly larger proportion of citizens over the age of 65. With reference to the lifecycle motive for saving. explain what impact you would expect this difference in age structure to have upon saving rates.

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