Abstract
Musgrave develops the concept of the “target saver,” in which the household saves in the present in order to finance a target level of consumption outlays in the future. The resulting household behavior is one in which a rise in the rate of interest in the present period reduces the amount of saving needed for future consumption, so that household saving is inversely rather than positively a function of the interest rate. The present study examines the potential implications of the target saver in the aggregate for macroeconomic stability and economic policy effectiveness.
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Cebula, R.J., Menon, S. Musgrave’s “target saver” theory: Implications for macroeconomic stability and economic policy effectiveness”. J Econ Finance 32, 426–433 (2008). https://doi.org/10.1007/s12197-008-9032-8
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DOI: https://doi.org/10.1007/s12197-008-9032-8