Decline In Us Personal Saving Rate
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Author | : Mr.Sam Ouliaris |
Publisher | : International Monetary Fund |
Total Pages | : 34 |
Release | : 2018-06-08 |
Genre | : Business & Economics |
ISBN | : 1484360982 |
This paper develops a time series model for aggregate consumption to predict the U.S. personal saving rate. It then uses the model to test whether there has been a structural break in consumption behavior because of the 2008 financial crisis. Before the crisis, the personal saving rate was trending downwards. However, in 2008 there was a significant rise in the saving rate that continued until the end of 2012, suggesting a permanent change in household behavior. To assess this issue formally, the unknown parameters of the model are estimated using data for 1961Q1-2007Q4, a period which precedes the crisis. The model is then used to predict the saving rate from 2008Q1 onwards and to assess whether the rise in the saving rate after 2008 was due to sizable, but transitory, income/wealth shocks or to changes in the underlying elasticities between saving and its determinants (hence structural). The statistical evidence suggests there was no structural break in the household saving behavior, implying that the rise in the saving rate during 2008-2012 was caused by the negative shocks to income, employment and wealth. This result explains why the saving rate resumed its decline in 2013, as real disposable income, employment and net worth recovered. Assuming that the real growth in these determinants remains strong, the estimated model predicts continued negative pressures on the current account deficit and further external imbalances attributable to the U.S. household sector.
Author | : |
Publisher | : |
Total Pages | : |
Release | : 2007 |
Genre | : |
ISBN | : |
Since the mid-1990s, the national income and product accounts personal saving rate for the United States has been trending down, dropping into negative territory for three months during the past two years. This paper examines measurement problems surrounding two of the standard definitions of the personal saving rate. The authors conclude that, despite these measurement problems, the recent decline of the United States personal saving rate to low levels seems to be a real economic phenomenon and may be a cause for concern for several reasons. After examining several possible explanations for the trend advanced in the recent literature, the authors conclude that none of them provides a compelling explanation for the steep decline and negative levels of the United States personal saving rate.
Author | : Barry Bosworth |
Publisher | : Brookings Institution Press |
Total Pages | : 146 |
Release | : 2012 |
Genre | : Business & Economics |
ISBN | : 0815721358 |
"Examines the decline in saving in the United States over the past quarter-century. Is it a statistical artifact of the official measure of saving? Why don't Americans save? What are the consequences for economic growth, the performance of the aggregate economy, and policy goals?"--Provided by publisher.
Author | : Jonathan A. Parker |
Publisher | : |
Total Pages | : 40 |
Release | : 1999 |
Genre | : Consumption (Economics) |
ISBN | : |
During the past two decades, the personal saving rate in the United States has fallen from eight percent to below zero. This paper demonstrates that this change represents a major shift in the allocation of newly produced goods. The share of GDP that households consume rose by 6 percentage points since 1980. This increase occurred concurrently with a reduction in the growth rate of real consumption spending per person, high real rates of return, and an increasing ratio of aggregate wealth to income. Despite this last fact, wealth changes can explain little of the boom in consumption spending. The largest increases in national wealth post-date the consumption boom and households with different wealth levels have similar increases in consumption. The paper also finds that the changing age distribution of the U.S. population does not explain the consumption boom. While it may be that new wealthier cohorts are driving this boom, the preponderance of evidence suggest rather that the rising consumption to income ratio is due to a common time effect. The main findings of the paper are consistent with either an increase in the discount rate or with a general belief in better economic times in the future. Alternatively, the low rates of saving could be due to a combination of factors such as the increase in intergenerational transfers from the Social Security system raising the consumption of the elderly and an increase in access to credit and expanded financial instruments raising the consumption of the young
Author | : Edward Montgomery |
Publisher | : |
Total Pages | : 62 |
Release | : 1983 |
Genre | : Finance, Personal |
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Total Pages | : |
Release | : 1986 |
Genre | : |
ISBN | : 9780262024761 |
Author | : |
Publisher | : Congress |
Total Pages | : 64 |
Release | : 1993 |
Genre | : Business & Economics |
ISBN | : |
Author | : Mr.Christopher Carroll |
Publisher | : International Monetary Fund |
Total Pages | : 47 |
Release | : 2012-09-01 |
Genre | : Business & Economics |
ISBN | : 1475505698 |
We argue that the U.S. personal saving rate’s long stability (from the 1960s through the early 1980s), subsequent steady decline (1980s - 2007), and recent substantial increase (2008 - 2011) can all be interpreted using a parsimonious ‘buffer stock’ model of optimal consumption in the presence of labor income uncertainty and credit constraints. Saving in the model is affected by the gap between ‘target’ and actual wealth, with the target wealth determined by credit conditions and uncertainty. An estimated structural version of the model suggests that increased credit availability accounts for most of the saving rate’s long-term decline, while fluctuations in net wealth and uncertainty capture the bulk of the business-cycle variation.
Author | : B. Douglas Bernheim |
Publisher | : University of Chicago Press |
Total Pages | : 408 |
Release | : 1991-05 |
Genre | : Business & Economics |
ISBN | : 9780226044040 |
"... Papers presented at a conference held at the Stouffer Wailea Hotel, Maui, Hawaii, January 6-7, 1989. ... part of the Research on Taxation program of the National Bureau of Economic Research." -- p. ix.
Author | : Eytan Sheshinski |
Publisher | : |
Total Pages | : 40 |
Release | : 1989 |
Genre | : Interest rates |
ISBN | : |
A sharp increase in the real interest rates in the U.S. in the 1980s was expected to induce a higher personal saving rate. Actually, between 1981 and 1983 the personal saving rate fell from 7.5 percent to 5.4 percent and for the 1985-1988 period it had averaged only 4 percent even though real interest rates have remained high. We argue that one possible explanation for this negative relation between interest rates and the personal saving rate is the large fraction of wealth, especially financial wealth, held by persons over 65 years old (this group has received more than 50 percent of all interest income in the U.S. during this period). Life cycle theory suggests, as we demonstrate, that the wealth effect created by an increase in the rate of interest reduces the savings of old persons and raises savings of the young and hence the effect on aggregate savings depends on the age distribution in the population.