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Private Saving in the United States: 1950-85

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  • Patric H. Hendershott
  • Joe Peek

Abstract

The official personal and private saving statistics contain a number of conceptual measurement errors. In this paper we develop and analyze personal and private saving measures adjusted for the difference between income tax payments and actual liabilities, saving via net purchases of government pension assets (including social security) and consumer durables, and that part of after-tax interest income attributable to inflation. We find that the adjusted personal and private saving rates in recent years are only slightly below their post-1950 averages, not at all time lows as reported in the official NIPA statistics. Furthermore, over the past 35 years, personal saving has been more volatile and corporate saving less volatile than the official measures. Also, the inflation premium corrections remove the negative correlation between personal and corporate saving. That is, the often observed negative correlation between the official measures of personal and corporate saving is due solely to measurement errors in the two series. Finally, the decrease in federal government saving in the 1980s is the continuation of a 30-year trend, not a one-time aberration.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2294.

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Date of creation: Jun 1987
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Publication status: published as In The Measurement of Saving, Investment and Wealth, Robert Lipsey and Helen Tice, eds. Studies in Income and Wealth, vol 52, University of Chicago press, 1989.
Handle: RePEc:nbr:nberwo:2294

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  1. Owen Evans, 1983. "Social Security and Household Saving in the United States: A Re-Examination (Sécurité sociale et épargne des ménages aux Etats-Unis: Un réexamen) (Seguridad social y ahorro familiar en ," IMF Staff Papers, Palgrave Macmillan, vol. 30(3), pages 601-618, September.
  2. E. Philip Howrey & Saul H. Hymans, 1978. "The Measurement and Determination of Loanable-Funds Saving," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 9(3), pages 655-685.
  3. David, Paul A & Scadding, John L, 1974. "Private Savings: Ultrarationality, Aggregation, and "Denison's Law."," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 225-49, Part I, M.
  4. Peek, Joe, 1982. "Personal Saving and the Measurement of Income Tax Liabilities," The Review of Economics and Statistics, MIT Press, vol. 64(1), pages 143-47, February.
  5. Patric H. Hendershott, 1986. "Debt and Equity Returns Revisited," NBER Chapters, in: Financing Corporate Capital Formation, pages 35-50 National Bureau of Economic Research, Inc.
  6. William Poole, 1972. "The Role of Interest Rates and Inflation in the Consumption Function," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 3(1), pages 211-220.
  7. Feldstein, Martin S., 1973. "Tax incentives, corporate saving, and capital accumulation in the United States," Journal of Public Economics, Elsevier, vol. 2(2), pages 159-171, April.
  8. Patric H. Hendershott & Joe Peek, 1985. "Household Saving: An Econometric Investigation," NBER Working Papers 1383, National Bureau of Economic Research, Inc.
  9. Eisner, Robert & Pieper, Paul J, 1986. "A New View of the Federal Debt and Budget Deficits: Reply," American Economic Review, American Economic Association, vol. 76(5), pages 1156-57, December.
  10. Alan J. Auerbach & Laurence J. Kotlikoff, 1981. "An Examination of Empirical Tests of Social Security and Savings," NBER Working Papers 0730, National Bureau of Economic Research, Inc.
  11. Jump, Gregory V, 1980. "Interest Rates, Inflation Expectations, and Spurious Elements in Measured Real Income and Saving," American Economic Review, American Economic Association, vol. 70(5), pages 990-1004, December.
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Cited by:
  1. John K. Hill, 1990. "Demographics and the foreign indebtedness of the United States," Research Paper 9002, Federal Reserve Bank of Dallas.
  2. Jonathan Skinner, 1990. "The Dynamic Efficiency Cost of Not taxing Housing," NBER Working Papers 3454, National Bureau of Economic Research, Inc.

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