We provide an explanation for two features that characterize the Italian saving rate: by international standards, Italy is a high-saving country; the Italian saving rate has declined markedly in the last three decades. We compare the size and characteristics of credit and insurance offered to households in the major OECD countries and argue that the strikingly low development of these financial arrangements in Italy may explain the evidence. In the second part of the paper wè present a number of empirical tests to assess the effect of borrowing constraints on households' saving. We consider also the potential roles of the public sector, of informal financial arrangements, of bequests and of the earnings profile, and reject them as explanations of the evidence.
This paper - presented at the Workshop on "Saving in Italy: Past and Future Trends, Household and Government Behaviour", held in Rome on 16-17 January 1992 - is part of a research project undertaken at the Bank of Italy. The Italian versions of all the contributions will be published in a special issue of "Contributi all'analisi economica".
