Household Saving: an Econometric Investigation

51 Pages Posted: 26 Dec 2000 Last revised: 14 Apr 2021

See all articles by Patric H. Hendershott

Patric H. Hendershott

University of Aberdeen - Centre for Property Research; National Bureau of Economic Research (NBER)

Joe Peek

Federal Reserve Banks - Federal Reserve Bank of Boston

Date Written: June 1984

Abstract

Household or personal saving is recomputed to include net purchases of consumer durables, net contributions to government life insurance and pension reserves, and an adjustment for the inflation premium component in interest income. These adjustments raise the measured household saving rate by nearly 5 percentage points in the 1965-75 period but result in an extremely sharp 7 percentage point decline in the rate between 1975 and the early 1980s. A model of household saving behavior is then presented and estimated using annual data from the 1952-82 period. While saving responds to numerous influences, major swings in the adjusted saving rate -- a significant decline in the 1950s and rebound in the early 1960s, as well as the decline since 1975 -- are largely explained by two variables: the wealth/income ratio and the growth rate of real income.

Suggested Citation

Hendershott, Patric H. and Peek, Joe, Household Saving: an Econometric Investigation (June 1984). NBER Working Paper No. w1383, Available at SSRN: https://ssrn.com/abstract=254520

Patric H. Hendershott (Contact Author)

University of Aberdeen - Centre for Property Research ( email )

Aberdeen AB24 2UF
Scotland

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Joe Peek

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

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