Savings Rates: Up or Down?

24 Pages Posted: 8 May 2020

See all articles by Guillermo Ordoñez

Guillermo Ordoñez

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Facundo Piguillem

Einaudi Institute for Economics and Finance (EIEF)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2020

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.

Keywords: capital gains, Human Capital, Savings rates

JEL Classification: E1, E2

Suggested Citation

Ordoñez, Guillermo and Piguillem, Facundo, Savings Rates: Up or Down? (April 2020). CEPR Discussion Paper No. DP14662, Available at SSRN: https://ssrn.com/abstract=3594294

Guillermo Ordoñez (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Facundo Piguillem

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Sallustiana, 62
Rome, 00187
Italy

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