| Abstract: | The potential effect of the changing age distribution of the U.S. population on the level of aggregate saving is examined. "The Modigliani-Brumberg life-cycle model predicts a relationship between age distribution and the aggregate saving ratio via the population growth rate, which affects the ratio of earner/savers to retiree-dissavers. Aging resulting from slower population growth will result in a decline in the aggregate saving rate. This paper utilizes empirical age-saving relations, together with projected long-run population age distributions, to estimate the age distribution effect on aggregate personal saving. Results predict a much smaller decline in the saving ratio than is generated by the basic life-cycle model." |
