behavior need to be refined beyond the assertion that households lift corporate and government veils or that corporate and government saving contribute to households' perception of life-cycle resource availability. Until they are so refined, the possibility remains that the statistical offset between corporate saving and taxes on the one hand and personal saving on the other is not behavioral but fronting for something else.
If the government's ability to stimulate personal consumption through tax-transfer measures is as limited as the foregoing evidence suggests, its power to contribute to recovery through conventional fiscal means, such as across-the-board tax changes, should not be exaggerated.67. While higher government purchases would stimulate aggregate demand, the difficulties of varying government expenditures in a timely fashion for countercyclical purposes are well known. Furthermore, the tax net of transfer rates has changed appreciably only within but not between cycles. The policy drama that has surrounded successive tax debates since at least 1964 should not be allowed to obscure the stability of the fiscal policy rule that has been followed implicitly since the end of the Korean War.
Adherence to the rule appears to have contributed to the net private saving rate changing fairly little across cycles to date. This outcome could change if a different fiscal policy were followed persistently in the future. Whether or not a particular component of the national saving rate, or any grouping of the components, remains approximately constant depends heavily on whether expectations regarding traditional fiscal policies can be broken. There is no economic law that says they should not be.
Capital consumption adjustment divided by net national|
|GS||Government saving (surplus or deficit) divided by NNP|
|IVA||Inventory valuation adjustment divided by NNP|