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Saving puzzles and saving policies in the United States

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Author Info
A Lusardi
J Skinner
S Venti

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Abstract

In the past two decades the widely reported personal saving rate in the United States has dropped from double digits to below zero. First, we attempt to account for the decline in the National Income and Product Accounts (NIPA) saving rate. The macroeconomic literature suggests that 40-50 per cent of the drop since 1988 can be attributed to households spending stock-market capital gains. Another 30 per cent is accounting transfers from personal saving into government and corporate saving because of the way pensions and capital gains taxes are treated in the NIPA. Second, while NIPA saving measures are well suited to measuring the supply of new funds for investment and capital accumulation, it is not clear that they should be the target of government saving policies. Finally, we emphasize that the NIPA saving rate is not useful in judging whether households are preparing for retirement or other contingencies. Many households have accumulated significant wealth, primarily through retirement saving vehicles and capital gains, even as the saving rate slid. There remains a segment of the population who save little and whose behaviour appears untouched either by the stock-market boom or the slide in personal saving. We explore reasons and policy options for their puzzling low saving rate. Copyright 2001, Oxford University Press.

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Publisher Info
Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

Volume (Year): 17 (2001)
Issue (Month): 1 (Spring)
Pages: 95-115
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Handle: RePEc:oup:oxford:v:17:y:2001:i:1:p:95-115

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Areendam Chanda, . "The Rise in Returns to Education and the Decline in Household Savings," Departmental Working Papers 2005-05, Department of Economics, Louisiana State University. [Downloadable!]
    Other versions:
  2. Martha A. Starr, 2006. "Macroeconomic dimensions of social economics: Saving, the stock market, and pension systems," Working Papers 2006-09, American University, Department of Economics. [Downloadable!]
  3. Martin Browning & Thomas F. Crossley, 2001. "The lifecycle model of consumption and saving," IFS Working Papers W01/15, Institute for Fiscal Studies. [Downloadable!]
    Other versions:
  4. Illing, Gerhard & Klüh, Ulrich, 2004. "Vermögenspreise und Konsum," Discussion Papers in Economics 316, University of Munich, Department of Economics. [Downloadable!]
  5. Annamaria Lusardi & Jonathan Skinner & Steven Venti, 2003. "Pension Accounting & Personal Saving," Just the Facts jtf8, Center for Retirement Research. [Downloadable!]
  6. Marialuz Moreno-Badia, 2006. "Who Saves in Ireland? The Micro Evidence," IMF Working Papers 06/131, International Monetary Fund. [Downloadable!]
  7. Barry Bosworth, 2004. "Why Don't Americans Save?," Working Papers, Center for Retirement Research at Boston College 2004-26, Center for Retirement Research. [Downloadable!]
  8. James M. Poterba & Steven F. Venti & David A. Wise, 2001. "The Changing Face of Private Retirement Saving in the United States," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 2(4), pages 3-11, October. [Downloadable!]
  9. Annamaria Lusardi, 2002. "Saving Viewed from a Cross-National Perspective," MEA discussion paper series 02024, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  10. José A. Herce, . "¿Es relevante el trato fiscal diferencial en el volumen de ahorro de los individuos?," Working Papers 2002-20, FEDEA. [Downloadable!]
  11. Annamaria Lusardi, 2002. "Saving Viewed from a Cross-National Perspective," MEA discussion paper series 02024, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  12. Wynne Godley, Alex Izurieta, 2001. "As The Implosion Begins . . .? Prospects and Policies for the U.S. Economy: A Strategic View," Economics Strategic Analysis Archive 01-7, Levy Economics Institute, The. [Downloadable!]
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