The same is definitely true for Greece, which began
dissaving (1) in 2006 as fiscal policy became expansionary, and this may be one reason why it faces a crisis in government credibility, although in some other countries that face problems, such as Spain and Ireland, savings levels were quite high until 2007.
The combination of low household saving and substantial government
dissaving would normally force a country to borrow from the rest of the world.
Of course, in the United States, private household demand may remain weak ha the short term but government spending is snore than making up for it, leading to large
dissaving at the national level.
According to the model, the consumption smoothing can be achieved by borrowing when earnings are low, saving for wealth accumulation when earnings are high, and
dissaving in retirement (Browning and Crossley 2001; Browning and Lusardi 1996).
However, the inflation component received by the lender is
dissaving. Coleman notes that the SNA guidelines recommend including such adjustments as memorandum items.
Housing tenure transition and
dissaving by the elderly.
However, one of the weaknesses of consumption expenditure is that it gives a short run status of household resources as it may be possible that consumption payments are made by
dissaving or by borrowing--a process which cannot be sustained in the long run.
Constantinides and Duffe's model also requires a substantial permanent component to idiosyncratic labor income, in order to keep consumers from smoothing it by saving and
dissaving. Yet standard calibrations such as in Heaton and Lucas [92] don't find enough persistence in the data.
But, as a general rule, private saving does not fully offset public
dissaving and this precautionary reaction may be contingent on national and historical circumstances.
"Uncertain Lifetime, Consumption, and
Dissaving in Retirement." Journal of Political Economy, 89(3), 1981, 561-77.
Net national saving did not pick up when net private saving did, because
dissaving by the government sector offset the increase in saving by business.
At the same time, our private investment may prove inadequate to keeping the economy growing rapidly, because government
dissaving will no longer be offset by capital flowing in from abroad.