GEORGE M. VON FURSTENBERG
IN THIS STUDY I attempt to explain how government, personal, and corporate saving rates--the three saving rates that combine to yield the national saving rate--are determined in the United States.1. The novel features of the analysis are the introduction of a "fiscal surprise" variable in the explanation of the personal saving rate and the identification of the degrees of interdependence between the three sectoral saving rates.
Past research on saving has often emphasized that saving out of different components of income may vary. This happens not just because these components are not necessarily of equal permanence but also because they go to income and age classes whose saving rates differ from those of other groups. While preserving some of the distinction between transitory and permanent components of income through the use of cyclical variables, I do not focus on saving from different components of disposable income. Instead I recognize that even components of the net national product that are not part of disposable income--that is, retained earnings and taxes--may have a pronounced effect on personal saving. Because retained earnings constitute corporate saving and because taxes minus government expenditures define government saving,____________________