U.S. Demographics and Saving: Predictions of Three Saving Models

Alan J. Auerbach, Jinyong Cai, Laurence J. Kotlikoff

NBER Working Paper No. 3404 (Also Reprint No. r1666)
Issued in December 1991
NBER Program(s):   PE

This paper compares the predictions of three different saving models with respect to the impact of projected U.S. demographic change on future U.S. saving rates. The three models are the life cycle model, the infinite horizon altruism model, and a reduced form econometric model. The findings for the different models indicate a great range of possible paths of future U.S. saving. However, the three models concur in predicting a peak in the U.S. national saving rate in the near future (within 15 years), followed by a significant decline in the saving rate thereafter. In fact, the findings suggest the strong possibility of negative U.S. saving rates beginning after 2030.

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Published: Carnegie-Rochester Conference Series on Public Policy, Vol. 34, pp. 135-156 , (Spring 1991).

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