In short, Cooper tells us not to worry about our current account or its underlying causes. I have a much darker and, I believe, more accurate view of our current account deficit. While I agree with much of what Cooper says, I disagree most strongly with his central thesis that the current...

In Australia, we debated the issue of sustainability of current account deficits extensively during the 1980s. A lot of the arguments that are being aired at the moment bear a striking similarity to the debate that occurred in Australia throughout the 1980s. Now, two decades on, by and large,...

Between the sixties and the late eighties the percentages of low-saving single-parent households and people living alone have grown dramatically at the expense of high-saving married households, while the household saving rate has declined equally dramatically. A preliminary analysis of...

The American Dream Demonstration, the largest collection of individual development account programs ever undertaken in the United States, has encouraging evidence that the poor can save. Could this be the future of asset development?

What are asset-development policies? What programs are underway to explore such policies? Larry Beeferman of the Asset Development Institute describes the movement and his views on why asset-development policies are vital to economic equality.

Psychological evidence indicates that a person's well-being depends not only on his current consumption of goods, but on a reference level determined by his past consumption. According to Kahneman and Tversky's (1979) prospect theory, people care much more about losses relative to their...

The economics literature offers competing hypotheses about the relationship between savings rates and output variability. This paper examines data for eight industrial countries to determine if there is a discernible pattern between savings rates and cyclical volatility of output. We find a...

This paper investigates why high income households in the United States save on average more than low income households in cross-section data. The three explanations considered are (1) age differences across households, (2) temporary earnings shocks, and (3) the structure of transfer payments....

Economists make extensive use of two separate descriptions of private saving behavior: the life-cycle (or overlapping generations) model, and models with intergenerational altruism. Analysis of the two frameworks is quite different, as are many of the long-run policy implications. This paper...