Corporate Savings and Shareholder Consumption

46 Pages Posted: 10 Feb 2001 Last revised: 8 Sep 2010

See all articles by Alan J. Auerbach

Alan J. Auerbach

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Kevin A. Hassett

American Enterprise Institute (AEI)

Date Written: June 1989

Abstract

This paper reexamines the implications of changing corporate savings, testing for the presence of a "corporate veil". We argue that previous tests for such s veil have lacked proper focus, identifying influences of corporate saving on private saving that are entirely consistent with a complete piercing of the corporate veil. We formulate two tests. Results based on the first find that wealth-neutral changes In corporate dividend policy do not significantly affect aggregate consumption, suggesting that no corporate veil exists, The second test finds the aggregate consumption response to changes in corporate wealth is close to zero, consistent with the presence of a veil but also with heterogeneity in the population with respect to consumption behavior.

Suggested Citation

Auerbach, Alan Jeffrey and Hassett, Kevin A., Corporate Savings and Shareholder Consumption (June 1989). NBER Working Paper No. w2994. Available at SSRN: https://ssrn.com/abstract=251266

Alan Jeffrey Auerbach (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Kevin A. Hassett

American Enterprise Institute (AEI) ( email )

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Washington, DC 20036
United States
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202.862.7177 (Fax)

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