Savings puzzles and saving policies in the United States

This paper first attempts to account for the decline in the National Income and Product Accounts (NIPA) saving rate. The macroeconomic literature suggests that 40%-50% of the drop since 1988 can be attributed to households spending stock-market capital gains. Another 30% is accounting transfers from...

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Bibliographic Details
Published in:Oxford review of economic policy 2001-04, Vol.17 (1), p.95
Main Authors: Lusardi, Annamaria, Skinner, Jonathan, Venti, Steen
Format: Article
Language:English
Subjects:
Accounting
Capital gains
Consumption
Economic theory
Households
Investments
Macroeconomics
National income and product accounts
NIPA
Pensions
Personal income
Public policy
Retirement benefits
Savings
Securities markets
Stock exchanges
Studies
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Summary:This paper first attempts to account for the decline in the National Income and Product Accounts (NIPA) saving rate. The macroeconomic literature suggests that 40%-50% of the drop since 1988 can be attributed to households spending stock-market capital gains. Another 30% is accounting transfers from personal saving into government and corporate saving because of the way pensions and capital gains taxes are treated in the NIPA. Second, while NIPA saving measures are well suited to measuring the supply of new funds for investment and capital accumulation, it is not clear that they should be the target of government saving policies. Finally, the paper emphasizes that the NIPA saving rate is not useful in judging whether households are preparing for retirement or other contingencies. There remains a segment of the population who save little and whose behavior appears untouched either by the stock-market boom or the slide in personal saving. Reasons and policy options for their puzzling low saving rate is explored.
ISSN:0266-903X
1460-2121