Aggregate saving is an important source of funds for domestic investment and economic growth and thus the question of what determines its level and rate remains a crucial research and policy agenda. Moreover, in the face of volatile flows of external finance, domestic saving has become even more critical for economic development. In particular, the recent financial turmoil in developing countries, brought about by rapid cross-border movements of capital, has led many countries to seriously consider a larger role for domestic saving (excluding net factor income from abroad) as a source of investment funds. Likewise, savings at the household level.
