NATIONAL BUREAU OF ECONOMIC RESEARCH
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The Saving Glut of the Rich and the Rise in Household Debt

Atif R. Mian, Ludwig Straub, Amir Sufi

NBER Working Paper No. 26941
Issued in April 2020
NBER Program(s):Corporate Finance, Economic Fluctuations and Growth, Monetary Economics

Rising income inequality since the 1980s in the United States has generated a substantial increase in saving by the top of the income distribution, which we call the saving glut of the rich. The saving glut of the rich has been as large as the global saving glut, and it has not been associated with an increase in investment. Instead, the saving glut of the rich has been linked to the substantial dissaving and large accumulation of debt by the non-rich. Analysis using variation across states shows that the rise in top income shares can explain almost all of the accumulation of household debt held as a financial asset by the household sector. Since the Great Recession, the saving glut of the rich has been financing government deficits to a greater degree.

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Document Object Identifier (DOI): 10.3386/w26941

 
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