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Household And Enterprise Saving And Capital Formation In The United States: A Market Transactions View

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  • Nancy
  • Richard Ruggles

Abstract

Contrary to conventional macro theory, it is not the consumption function in terms of either the permanent income or the life‐cycle theory of saving that has furnished the saving for enterprise capital formation in the United States. Household sector accounts indicate that household gross saving, correctly measured, did not exceed household gross capital formation in the United States over the period since 1947. Furthermore, historical data on enterprise saving and capital formation in the United States, and cross‐section tax return data of U.S. corporations indicate that the gross saving for many enterprise sectors has been equal to or greater than their gross capital formation. There are exceptions, however: these same sources indicate that public utilities have borrowed substantially to finance their capital formation. Finally, it is argued that employer pension and insurance reserves held by financial institutions for future benefit payments represent retained income of a nature similar to undistributed profits, and that these constitute a source of saving in the economy.

Suggested Citation

  • Nancy & Richard Ruggles, 1992. "Household And Enterprise Saving And Capital Formation In The United States: A Market Transactions View," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 38(2), pages 119-163, June.
    • Handle: RePEc:bla:revinw:v:38:y:1992:i:2:p:119-163
    DOI: 10.1111/j.1475-4991.1992.tb00417.x
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    Cited by:

    1. Jan Toporowski, 2012. "Corporate Liquidity and Financial Fragility: The Role of Investment, Debt and Interest," Working Papers 169, Department of Economics, SOAS University of London, UK.
    2. Dimitri B. Papadimitriou & Greg Hannsgen & Michalis Nikiforos & Gennaro Zezza, 2013. "Rescuing the Recovery: Prospects and Policies for the United States," Economics Strategic Analysis Archive sa_oct_13, Levy Economics Institute.
    3. Richard Ruggles, 1993. "Accounting for Saving and Capital Formation in the United States, 1947-1991," Journal of Economic Perspectives, American Economic Association, vol. 7(2), pages 3-17, Spring.
    4. Bos, Frits, 2011. "Three centuries of macro-economic statistics," MPRA Paper 35391, University Library of Munich, Germany.
    5. Anwar Shaikh, 2009. "Economic Policy In A Growth Context: A Classical Synthesis Of Keynes And Harrod," Metroeconomica, Wiley Blackwell, vol. 60(3), pages 455-494, July.
    6. Bos, Frits, 2009. "The National Accounts as a Tool for Analysis and Policy; History, Economic Theory and Data Compilation Issues," MPRA Paper 23582, University Library of Munich, Germany.
    7. Jamee K. Moudud, 2000. "Harrod versus Thirlwall: A Reassessment of Export-Led Growth," Macroeconomics 0012002, University Library of Munich, Germany.

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