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Productivity growth and the U.S. saving rate

  • Iscan, Talan B.

Over the last half century, the saving rate in the United States exhibited significant variations. In this paper, I examine whether a general equilibrium model that allows for shifts in the growth rate of total factor productivity can account for these variations. The model generates significant medium-run variations in the U.S. saving rate, and establishes a link between episodes of productivity growth slowdowns or accelerations and the saving rate--two concepts that have often been treated in isolation. While a productivity-growth based explanation is able to account for broader trends in the rising consumption-income ratio from about 1980 to 2000, there are other episodes during which the model is less successful.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 1-2 (January)
Pages: 501-514

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:501-514
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