NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Corporate Savings and Shareholder Consumption

Alan J. Auerbach, Kevin Hassett

NBER Working Paper No. 2994 (Also Reprint No. r1640)
Issued in June 1989
NBER Program(s):   ME

This paper reexamines the implications of changing corporate savings, testing for the presence of a "corporate veil". We argue that previous tests for such s veil have lacked proper focus, identifying influences of corporate saving on private saving that are entirely consistent with a complete piercing of the corporate veil. We formulate two tests. Results based on the first find that wealth-neutral changes In corporate dividend policy do not significantly affect aggregate consumption, suggesting that no corporate veil exists, The second test finds the aggregate consumption response to changes in corporate wealth is close to zero, consistent with the presence of a veil but also with heterogeneity in the population with respect to consumption behavior.

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Document Object Identifier (DOI): 10.3386/w2994

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