Inflation, Government Deficits and Private Saving (Classic Reprint)

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Excerpt from Inflation, Government Deficits and Private Saving This paper analyzes the way in which government deficits and inflation influence private saving. The analysis focuses on two specific issues: the extent to which future taxes called for by government deficits are reflected in the decision to save, and the ability of consumers to distinguish their real income from that measured by national income accountants. Implications for these issues are derived in the context of the life cycle hypothesis, and tested over an international cross section of observations on aggregate saving spanning the period 1960 to 1979. The results indicate that while consumers are able to correctly distinguish their true from their reported income, they do not appear to recognize the future taxes associated with government deficits. The estimates also show that the upwards shift in the private savings ratio observed between the sixties and the seventies is not completely explained by the model analyzed here. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully, any imperfections that remain are intentionally left to preserve the state of such historical works.