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Corporate Savings and Shareholder Consumption

In: National Saving and Economic Performance

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  • Alan J. Auerbach
  • Kevin Hassett

Abstract

This paper reexamines the implications of changing corporate savings, testing for the presence of a "corporate veil". We argue that previous tests for such s veil have lacked proper focus, identifying influences of corporate saving on private saving that are entirely consistent with a complete piercing of the corporate veil. We formulate two tests. Results based on the first find that wealth-neutral changes In corporate dividend policy do not significantly affect aggregate consumption, suggesting that no corporate veil exists, The second test finds the aggregate consumption response to changes in corporate wealth is close to zero, consistent with the presence of a veil but also with heterogeneity in the population with respect to consumption behavior.

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This chapter was published in:

  • B. Douglas Bernheim & John B. Shoven, 1991. "National Saving and Economic Performance," NBER Books, National Bureau of Economic Research, Inc, number bern91-2, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 5988.

    Handle: RePEc:nbr:nberch:5988

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    Cited by:
    1. Lichtenberg, Frank R., 1995. "Labour market institutions, liquidity constraints, and macroeconomic stability," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 28(1), pages 145-154, September.
    2. Joseph G. Haubrich, . "Consumption and Fractional Differencing: Old and New Anomalies," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 20-89, Wharton School Rodney L. White Center for Financial Research.
    3. Mechthild Schrooten & Sabine Stephan, 2001. "Savings in Central Eastern Europe," Discussion Papers of DIW Berlin 250, DIW Berlin, German Institute for Economic Research.
    4. Jonathan Skinner & Daniel Feenberg, 1990. "The Impact of the 1986 Tax Reform Act on Personal Saving," NBER Working Papers 3257, National Bureau of Economic Research, Inc.
    5. Weber, Christian E., 2002. "Intertemporal non-separability and "rule of thumb" consumption," Journal of Monetary Economics, Elsevier, Elsevier, vol. 49(2), pages 293-308, March.
    6. Alan J. Auerbach & Daniel Feenberg, 2000. "The Significance of Federal Taxes as Automatic Stabilizers," NBER Working Papers 7662, National Bureau of Economic Research, Inc.
    7. Poterba, J.M., 1989. "Dividends, Capital Gains And The Corporate Veil: Evidence From Britain, Canada And The United States," Working Papers, John Deutsch Institute for the Study of Economic Policy 3, John Deutsch Institute for the Study of Economic Policy.
    8. Alan J. Auerbach & Laurence J. Kotlikoff, 1989. "Demographics, Fiscal Policy, and U.S. Saving in the 1980s and Beyond," NBER Working Papers 3150, National Bureau of Economic Research, Inc.
    9. David Altig, 1990. "The case of the missing interest deductions: will tax reform increase U. S. saving rates?," Economic Review, Federal Reserve Bank of Cleveland, Federal Reserve Bank of Cleveland, issue Q IV, pages 22-34.
    10. Charles Calomiris & Stanley D. Longhofer & William Miles, 2009. "The (Mythical?) Housing Wealth Effect," NBER Working Papers 15075, National Bureau of Economic Research, Inc.

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