This paper presents evidence that speculative bubbles can have sizeable effects on house prices, and on housing investment. We infer that deviations of asset prices from fundamental values may have serious consequences for real activity, and explore some policy implications. The analysis relies...

This paper concerns pitfalls associated with the use of approximations to dynamic Euler equations. Two applications of the approximations are notable. First, tests for precautionary saving motives typically involve regressing consumption growth on uncertainty in expected consumption growth. The...

As of May 1988, over 8 million workers had received their pension benefits as lump-sum distributions (LSDs) when they changed jobs. In 1986 Congress imposed a 10% tax penalty on the amount of LSDs not rolled over into tax-deferred instruments. This paper examines the effects of this tax penalty...

Theoretically, the decline in saving jeopardizes our economy because savings are lent to businesses for investment. In reality, the U.S. economy is doing better than the economies of countries where saving is much higher. Can this continue?

An argument that curtailing deductions for personal interest expense would be a more effective strategy for increasing national saving.

Using a unique set of household level panel data, we estimate the effect of capital gains on saving by asset type, controlling for observable and unobservable household specific fixed effects. The results suggest that the decline in the personal saving rate since 1984 is largely due to the...

Although households have invested billions in 401(k) accounts, these balances may not be new saving if workers invest money that they would have saved in the program's absence. In this paper, I assess the effect of the 401(k) program on saving by comparing changes in the wealth of 401(k)...