The Quantitative Consequences of Raising the U.S. Saving Rate

Abstract

The authors investigate consequences of a permanent unphased increase in U.S. gross rate. They find that the sacrifice time--the time that elapses until consumption surpasses value it would have had under initial rate--is roughly six years and is insensitive to percentage increase in rate ([Delta sub s]). The percentage gain in output at end of decade-- decade gain--is roughly 26% of [Delta sub s], while percentage gain in consumption is roughly 8% of [Delta sub s]. The saving rate return--the internal rate of return on a permanent increase in rate--is roughly 16% and is insensitive to [Delta sub s]. Copyright 1991 by MIT Press.