| Abstract: | This paper examines the relationship between the post-tax real interest rate and the Australian household saving ratio at the empirical level. Using alternative models of the consumption-saving decision and different estimation periods, it is shown that the post-tax real interest rate exerts a significant negative influence on the saving ratio. The estimates, therefore, imply that the fall in post-tax real interest rates during the 1970s contributed to the rise in the Australian saving ratio. |
