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NBER Working Papers and Publications
|July 1989||An Explanation of the Behavior of Personal Savings in the United States in Recent Years|
with Eytan Sheshinski: w3040
A sharp increase in the real interest rates in the U.S. in the 1980s was expected to induce a higher personal saving rate. Actually, between 1981 and 1983 the personal saving rate fell from 7.5 percent to 5.4 percent and for the 1985-1988 period it had averaged only 4 percent even though real interest rates have remained high. We argue that one possible explanation for this negative relation between interest rates and the personal saving rate is the large fraction of wealth, especially financial wealth, held by persons over 65 years old (this group has received more than 50 percent of all interest income in the U.S. during this period). Life cycle theory suggests, as we demonstrate, that the wealth effect created by an increase in the rate of interest reduces the savings of old persons and...
|July 1983||The Level and Volatility of Interest Rates in the United States: The Roles of Expected Inflation, Real Rates, and Taxes|
with John H. Makin: w1167
This paper attempts to demonstrate a need to expand the simple Fisherian view whereby changes in interest rates are explained largely by changes in expected inflation. It presents and tests a model of expected, after-tax real interest rate behavior which, together with a group of explanatory variables suggested by a structural model, takes full account of implications of a broad range of U.S. tax code provisions for behavior of interest rates. Determinants of interest rate volatility are also investigated.The model and results of empirical testing suggest:(1) why the measured impact on interest rates of changes in anticipated inflation has been below levels anticipated by many investigators; (2) how the measured impact on interest rates of explanatory variables is conditional on tax rates ...
Published: Taxation, Inflation and Interest Rates, ed. Vito Tanyi International Monetary Fund Washington DC, 1984.
|1964||Comparison of European and United States Tax Structures and Growth Implications|
with Otto Eckstein
in The Role of Direct and Indirect Taxes in the Federal Reserve System, NBER and The Brookings Institution