Taxation, Saving and the Rate of Interest

Michael J. Boskin

No 135, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: After exploring both the crucial role of the interest elasticity of the saving rate in the analysis of a wide variety of issues in economic - particularly tax - policy and reasons why previous studies of the effect of interest rates on consumption and saving have biased the estimated elasticity toward zero, this study presents new estimates of consumption functions based on aggregate U.S. time series data. The results are striking: a variety of functional forms, estimation methods and definitions of the real after-tax rate of return invariably lead to the conclusion of a substantial interest elasticity of saving.

Date: 1976-04
Note: PE
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Citations: View citations in EconPapers (4)

Published as Journal of Political Economy (April 1978).

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