IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/14662.html
   My bibliography  Save this paper

Savings Rates: Up or Down?

Author

Listed:
  • Piguillem, Facundo
  • Ordoñez, Guillermo

Abstract

It depends what we want to measure. Most literature has focused on observed flow of savings (per-period savings as fraction of GDP), which has declined persistently since 1980. Even though this decline means that fewer funds are available for investment in each period, it does not follow that the households' actual savings (underlying, not observed, savings determined by dynamic optimization) also go down. We theoretically link these two concepts, discuss the conditions under which they move in opposite directions, and show that indeed the actual savings rate has sharply increased since 1980.

Suggested Citation

  • Piguillem, Facundo & Ordoñez, Guillermo, 2020. "Savings Rates: Up or Down?," CEPR Discussion Papers 14662, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14662
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP14662
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Emmanuel Farhi & Francois Gourio, 2018. "Accounting for Macro-Finance Trends: Market Power, Intangibles, and Risk Premia," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(2 (Fall)), pages 147-250.
    2. Matthieu Gomez, 2017. "Asset Prices and Wealth Inequality," 2017 Meeting Papers 1155, Society for Economic Dynamics.
    3. Lawrence Summers & Chris Carroll, 1987. "Why Is U.S. National Saving So Low?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(2), pages 607-642.
    4. Patric H Hendershott & Joe Peek, 1987. "Private Saving in the United States: 1950-85," Boston College Working Papers in Economics 134, Boston College Department of Economics.
    5. Campbell, John Y, 1987. "Does Saving Anticipate Declining Labor Income? An Alternative Test of the Permanent Income Hypothesis," Econometrica, Econometric Society, vol. 55(6), pages 1249-1273, November.
    6. William D. Nordhaus, 1995. "How Should We Measure Sustainable Income?," Cowles Foundation Discussion Papers 1101, Cowles Foundation for Research in Economics, Yale University.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guillermo Ordoñez & Facundo Piguillem, 2020. "Savings and Saving Rates: Up or Down?," NBER Working Papers 27179, National Bureau of Economic Research, Inc.
    2. Guillermo Ordonez & Facundo Piguillem, 2022. "Saving Rates and Savings Ratios," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 46, pages 365-381, October.
    3. Bradford, D.F., 1989. "Market Value Us. Financial Accounting Measures Of National Saving," Papers 34, Princeton, Woodrow Wilson School - Discussion Paper.
    4. Adrien Auclert & Hannes Malmberg & Frederic Martenet & Matthew Rognlie, 2021. "Demographics, Wealth, and Global Imbalances in the Twenty-First Century," NBER Working Papers 29161, National Bureau of Economic Research, Inc.
    5. William G. Gale & John Sabelhaus, 1999. "Perspectives on the Household Saving Rate," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(1), pages 181-224.
    6. Barış Kaymak & Immo Schott, 2023. "Corporate Tax Cuts and the Decline in the Manufacturing Labor Share," Econometrica, Econometric Society, vol. 91(6), pages 2371-2408, November.
    7. Palumbo, Michael & Rudd, Jeremy & Whelan, Karl, 2006. "On the Relationships Between Real Consumption, Income, and Wealth," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 1-11, January.
    8. PAUL CASHIN & C. JOHN McDERMOTT, 1998. "Are Australia's Current Account Deficits Excessive?," The Economic Record, The Economic Society of Australia, vol. 74(227), pages 346-361, December.
    9. Mr. Jacques A Miniane & Benoît Mercereau, 2004. "Challenging the Empirical Evidence From Present Value Models of the Current Account," IMF Working Papers 2004/106, International Monetary Fund.
    10. Ufuk Akcigit & Sina T. Ates, 2023. "What Happened to US Business Dynamism?," Journal of Political Economy, University of Chicago Press, vol. 131(8), pages 2059-2124.
    11. Mr. Christopher Carroll & Mr. Martin Sommer & Mr. Jiri Slacalek, 2012. "Dissecting Saving Dynamics: Measuring Wealth, Precautionary, and Credit Effects," IMF Working Papers 2012/219, International Monetary Fund.
    12. Meissner, Thomas & Rostam-Afschar, Davud, 2017. "Learning Ricardian Equivalence," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 273-288.
    13. Kim, H. Youn, 2017. "The permanent income hypothesis, transitional dynamics, and excess sensitivity of consumption," Structural Change and Economic Dynamics, Elsevier, vol. 40(C), pages 10-25.
    14. Alessie, Rob & Lusardi, Annamaria, 1997. "Saving and income smoothing: Evidence from panel data," European Economic Review, Elsevier, vol. 41(7), pages 1251-1279, July.
    15. Pierre Dubois & Bruno Jullien & Thierry Magnac, 2008. "Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence," Econometrica, Econometric Society, vol. 76(4), pages 679-725, July.
    16. Bussière, Matthieu & Karadimitropoulou, Aikaterini E. & León-Ledesma, Miguel A., 2021. "Current Account Dynamics And The Real Exchange Rate: Disentangling The Evidence," Macroeconomic Dynamics, Cambridge University Press, vol. 25(1), pages 28-58, January.
    17. van der Ploeg, F., 1989. "Risk aversion, intertemporal substitution and consumption : The CARA-LQ problem," Discussion Paper 1989-53, Tilburg University, Center for Economic Research.
    18. Bandi, Federico M. & Bretscher, Lorenzo & Tamoni, Andrea, 2023. "Return predictability with endogenous growth," Journal of Financial Economics, Elsevier, vol. 150(3).
    19. Stefan Homburg, 2014. "Overaccumulation, Public Debt and the Importance of Land," German Economic Review, Verein für Socialpolitik, vol. 15(4), pages 411-435, November.
    20. David Meerschwam, 1991. "The Japanese Financial System and the Cost of Capital," NBER Chapters, in: Trade with Japan: Has the Door Opened Wider?, pages 191-224, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Savings rates; Capital gains; Human capital;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:14662. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.