15 , This again raises the suspicion that the accuracy with which real interest rates measure intertemporal prices varies across the two subsamples.** Likewise, M2/GNP is the other variable whose sign is not robust across samples: negative and insignificant in the full sample, positive and insignificant in the LDC sample, and significantly positive in the OECD sample.

There are also some changes in the magnitude of the estimated coefficients across samples. The level of private income and its rate of growth are always positively related to the private saving rate, but their estimated coefficients are smaller in the OECD (where the level effect is in fact insignificant, a pattern already found by Modigliani 1992) than in the LDC sample. This seems consistent with subsistence-consumption theories, which predict a higher impact of income and growth on saving rates at low levels of income. The size of the estimated coefficients of the demographic variables is uniformly smaller in the case of the OECD sample than in the LDC and full samples. This result likely reflects non-linear saving effects of the demographic variables, as well as the greater homogeneity across OECD populations in terms of urbanization and age structure. The private credit flow ratio also carries a considerably larger coefficient in the LDC subsample than in the OECD subsample. This is possibly due to the fact that credit constraints in developed countries are mostly non-binding, and therefore increases in private credit flows in these countries do not reflect improved credit availability.

Finally, it is puzzling that the coefficient on the public saving rate is found to be larger in the group of developing countries than in the OECD subsample. We would expect that the conditions for Ricardian equivalence to hold are more prevalent in industrial than in developing countries. The large estimated coefficient on the public saving ratio for the group of LDCs may reveal that, despite our best efforts, measurement error is partly driving the negative correlation between private and public saving rates. This is a likely possibility given that private saving was derived as the difference between national and public saving - -any error in public saving would translate mechanically in an error of the opposite sign in private saving. If we assume the estimated public saving coefficient for the OECD sample as mostly free from measurement error, then we find a larger effect of public saving on national saving than reported above. A permanent increase in public saving of 4% of GNDI would lead to an increase in national saving of 3.6% of GNDI in the short run and 2.6% of GNDI in the long run. Interestingly, for both the industrial and developing country subsamples, Wald tests allow clear rejection of full long-run Ricardian offsetting, with p- values below 1 percent.

# 4.4 Alternative definitions of the public sector

Table 6 presents full-sample system-GMM estimation results using the four . alternative definitions of the public sector introduced earlier. Up to now we have focused on the public sector definition that includes the general government and, when available, public enterprises; furthermore, the related saving and income data have been adjusted to account for the inflationary erosion of privately-held public liabilities. The results of this core regression, discussed above, are reproduced in Table 6, column 4, under the heading of “PA.” The other columns make use instead of the three alternative public- (and private-) sector saving measures introduced earlier corresponding to, respectively, unadjusted central