Munich Personal RePEc Archive

What Caused the Decline in the US Saving Ratio?

Paradiso, Antonio and Rao, B. Bhaskara (2011): What Caused the Decline in the US Saving Ratio?

[img]
Preview
PDF
MPRA_paper_28023.pdf

Download (321Kb) | Preview

Abstract

We investigate whether the mortgage equity withdrawal (MEW) mechanism is useful for explaining the large declines in the US personal saving ratio in the last two decades. MEW depends on house price inflation and mortgage rates. In addition stock prices may affect saving ratio. Therefore, we estimate a VEC model with these four variables. The impulse response analysis shows that saving ratio decreases with positive shocks to asset prices and increases with positive shocks to mortgage rates.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.