Working Paper: CEPR ID: DP14662
Authors: Facundo Piguillem; Guillermo Ordoez
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: savings rates; capital gains; human capital
JEL Codes: E1; E2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increasing capital gains (E22) | decrease in observed savings rates (E21) |
| decrease in observed savings rates (E21) | increase in actual savings rates (D14) |
| decrease in interest rates (E43) | increase in human capital value (J24) |
| increase in human capital value (J24) | decrease in observed savings rates (E21) |