Fiscal Incentives for Household Saving

This paper is a study of fiscal incentives for household saving. Section I discusses the rationale for and the general features of such incentives, and considers some of the problems that arise in their operation. A detailed consideration of different types of incentive, as applied in various countries, follows in Section II. Section III examines in depth the experience with these types of incentive in three countries—France, the Federal Republic of Germany, and Japan. Section IV contains some concluding remarks.


This paper is a study of fiscal incentives for household saving. Section I discusses the rationale for and the general features of such incentives, and considers some of the problems that arise in their operation. A detailed consideration of different types of incentive, as applied in various countries, follows in Section II. Section III examines in depth the experience with these types of incentive in three countries—France, the Federal Republic of Germany, and Japan. Section IV contains some concluding remarks.

This paper is a study of fiscal incentives for household saving. Section I discusses the rationale for and the general features of such incentives, and considers some of the problems that arise in their operation. A detailed consideration of different types of incentive, as applied in various countries, follows in Section II. Section III examines in depth the experience with these types of incentive in three countries—France, the Federal Republic of Germany, and Japan. Section IV contains some concluding remarks.

I. General Principles

World-wide emphasis on economic growth—and the concomitant improvement in living standards—has led to high priority being attached to capital formation of all sorts. An indication of this priority is the great variety of tax incentives for investment in force in both industrial and less developed countries. The financing of such investment has also presented problems. Developed countries that pursue full employment policies must change expenditure patterns to promote more saving if resources are to be released to enable this investment to take place at a satisfactory rate.

In less developed countries, the problem is defined somewhat differently: increasing the rate of domestic saving is considered to be of first importance in most discussions of economic development.1 However, there is a widespread feeling that much saving in less developed countries is not being channeled in the right direction; it is being put to socially unproductive uses, such as the purchase of gold, jewelry, and real estate, rather than being invested to yield a future income stream. Emphasis is therefore placed on mobilizing domestic savings, which connotes both an increase in the domestic saving rate and the channeling of existing and new savings into uses that will increase the rate of economic growth.

Governments may achieve the above-mentioned objectives through the budgetary process or may encourage the growth and proper use of savings, at both the corporate and household level, by either fiscal or financial means. This paper concentrates on fiscal incentives for saving, particularly at the household level, under the personal income tax. This definition covers attempts not only to augment the overall rate of saving but also to channel it toward desirable uses. Such incentives usually take the form of favorable treatment under the provisions of the income tax code, either for income that is saved (especially if it is put to particular uses) or for the return on savings (or certain types of savings). As such, they may be considered tax expenditures and are open to the criticisms to which such expenditures have been subjected.2

Broadly speaking, savings incentives may be introduced into the income tax structure in two ways:

1. The first is to exempt saving from income taxation. This method raises a host of definitional problems, since saving is defined as income minus consumption; there is thus a need to define both income and consumption and to give such definitions operational meaning before saving can be exempted from income taxation. Consequently, countries wishing to exempt saving from income tax prefer to allow new subscriptions to various types of savings media as deductions from taxable income. As this treatment does not extend to all possible savings media, it favors, in effect, certain savings channels over others. Life insurance premiums are favored compared with holding extra currency or jewelry, for example. Thus both aspects—augmenting the rate of saving and channeling that saving into preferred uses—become intertwined, even in developed countries.

2. The second means of introducing a savings incentive into the income tax structure is to exempt, or treat favorably, the yield on savings. Some assets, such as currency and gold, have no money yield or their yield may not be taxable for other reasons, for example, the imputed yield of housing services from owner-occupied homes, so that, once again, only certain forms of savings can be encouraged by this means.

In addition, a system of bonus payments is in effect in a number of countries, notably the United Kingdom and the Federal Republic of Germany. Amounts saved under these schemes are matched by tax-free bonus payments as long as certain conditions are met.

In the simplest case, both the main types of incentive can be shown to be equivalent in their effects upon the rate of return. Suppose that the annual gross income from an asset is r, the net-of-tax income being r(l − t) where t is the taxpayer’s marginal rate. If the purchase price of the asset is x, the posttax rate of return is r(l − i)/x. If a deduction is allowed for savings applied to the purchase of this type of asset, the saver now pays x(l−t) and the rate of return becomes r(l − t)/x(l − t), an improvement of 1/1−t of the original net yield. If an exemption is granted for the income from this asset, the rate of return becomes r/x, again an improvement of 1/1−t. Therefore, both types of scheme are more valuable, the higher the effective marginal rate of the taxpayer involved. This result has stimulated governments to place ceilings on the amount deductible or exempt in order to mitigate the tax benefits that higher-income taxpayers can receive from these incentives.

An operational problem that arises in connection with deductions is to ensure that they are not used as a means of tax avoidance over a period of years by means of alternate saving and dissaving. Governments tend, therefore, to favor contractual saving, especially in the form of life insurance and retirement plans, as withdrawal from these schemes is often either impossible or costly. Where deductions are allowed for the purchase of other types of asset, there are usually rules concerning a minimum holding period for the assets thereby acquired.

A variety of other motivations has probably played a role in the introduction of the modifications in the tax system regarded in this study as tax incentives. One may be a desire to restore equitable treatment of the small saver who may not have access to the capital market and its higher-yielding debt instruments. Another may be a desire not to complicate the workings of a pay-as-you-earn system by introducing small amounts of side income into the coding procedure. In addition, the widespread exemption of interest on public sector bonds may be an attempt to meet the financing requirements of governments more cheaply than otherwise.3 However, as seen earlier, the benefits from such exemptions and deductions do tend to favor higher-income tax-payers, while many of these other modifications have been introduced with the small saver in mind. In certain countries, a ceiling has therefore been placed on the income levels at which such deductions or exemptions can be claimed. In Colombia, for example, dividend and interest income up to Col$ 12,000 was exempt as long as total income was below Col$ 100,000. This type of income ceiling on the applicability of deductions or exemptions introduces a “notch” problem, where tax liability rises sharply at Col$ 100,000, or whatever the income ceiling may be, interfering with the overall progressive structure. The Musgrave mission to Colombia recommended the use of a vanishing formula whereby the amount of the exemption starts to fall proportionately when income exceeds a certain figure, so that the rise in tax liability is smoothed over a range of taxable income.4 For example, the exemption would be reduced by a certain percentage (say, 1 per cent) for each specified amount by which income exceeds the full exemption ceiling. A more popular solution is to place the ceiling on the amount of tax-exempt income or on the amount of allowable deductions, although this solution does not meet the problem fully, since the deductions and exemptions are still worth more to the high-bracket taxpayer.

The effect of many of these incentives is to allow the debtor to pay lower rates of interest than he would otherwise find it necessary to pay. The benefits of tax exonerations will therefore be divided between borrowers and lenders. If all the benefit accrues to the borrower, there will be no effect on the savings decision of households, except through possible distributional effects, since deductions and exemptions favor taxpayers with high marginal rates.

II. Incentives as Applied in Different Countries

Tables 1 and 2 show the countries that have savings incentives, as defined earlier, by type of incentive. Table 1 shows the different types of deductions and exemptions from taxable income by general categories. Table 2 shows countries with more specialized types of incentive: savings bonuses, credits, and special low rates.

Table 1.

Types of Tax Deductions and Exemptions of Countries with Savings Incentives

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Sources: United Kingdom, Board of Inland Revenue, Income Taxes Outside the United Kingdom (London, 1974); Ernst and Ernst, International Business Series; International Bureau of Fiscal Documentation, Guides to European Taxation, Vol. III: The Taxation of Private Investment Income and African Tax Systems; Committee to Review National Savings, Report (Cmnd. 5273, London, 1973), Appendix II, pp. 285-309; Foreign Tax Law Association, Income Tax Service (various countries); nonconfidential information obtained by Fund staff from national sources; Organization of American States, research files.

Ceiling applicable.

Important restrictions.

Less than full deduction or exemption.

Table 2.

Selected Countries: Other Types of Tax Incentive

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Sources: See Table 1.

Issued to raise finance for priority sectors.


The most striking feature of Table 1 is the large number of countries in which the income from certain public sector bonds is exempt from income tax. This is a good example of the mixed intentions with which certain measures are introduced. In some countries the purpose of such exemptions is to cheapen the servicing of the public debt by allowing the government to offer lower interest rates than it would otherwise have done. This method of lightening the debt service burden can be shown to be inefficient in the sense that the tax loss more than offsets the reduced interest burden, as long as the tax structure is progressive. The reduced interest burden is equal, in any year, to the difference between the rate that the government pays on the tax-exempt securities and the rate that it pays on alternative taxable issues, multiplied by the amount of tax-exempt debt outstanding. The loss to the authorities is equal to the taxes that investors in these privileged securities would have paid had they bought the same amount of taxable issues as they did tax-exempt issues. The marginal holder of tax-exempt bonds will be indifferent as between the tax-exempt and the taxable bonds; his tax saving will equal his interest loss. However, inframarginal, high-bracket taxpayers would have paid more taxes on the return from taxable issues than the government saves in interest charges on their holdings of tax-exempt issues. Thus, the revenue loss to the government is greater than the reduced interest burden, as long as the tax structure is progressive. If the structure is proportional, the saving in interest cost exactly equals the loss in tax revenue.5

Often, however, such exoneration also represents attempts to channel savings into certain priority areas involving the public sector. In Spain, for example, interest on certificates of the National Housing Institute and bonds of the National Institute for Regional Development are tax free. In other countries, such tax-free debt instruments may represent merely one of a variety of ways of channeling savings into the finance of the public sector: National Savings Certificates in the United Kingdom, for instance, which are one of a number of obligations issued by the Government; until recently, interest on all other government obligations was taxable. Also, the tax exemption of state and local bond interest in the United States is a means of channeling savings into the finance of state and municipal projects, again at high cost to the U. S. Treasury. It has been estimated that the federal revenue loss on municipal bonds issued in 1969 was about $2.6 billion over their lifetime, compared with interest savings to state and local governments of $1.9 billion.6

A problem connected with exemptions for public sector bond issues is that they may raise financing difficulties for the private sector, particularly since such tax-exempt bonds are particularly attractive to higher-income taxpayers. In some countries that exempt interest on government securities there are also tax privileges for interest on privately issued bonds, for example, in Spain (see special low rates, later in Section II) or in Greece. In the latter, interest on bonds issued by the Government and the Public Power Corporation is exempt. Interest on bonds issued by Greek corporations engaged in industrial activities is also tax exempt, provided that the amount raised by the loan is used for the extension of their industrial equipment. It is thus likely that the introduction of tax exemptions for interest on a range of government and other public sector bonds will lead to a demand for similar treatment on the part of the private sector, unless the range of tax exempt obligations is narrow, for example, in the United Kingdom, where only about 20 per cent of outstanding public and publicly guaranteed debt in private hands benefits from tax privileges, with ceilings either on the size of holdings or on the amount of exempt income receivable.

Countries, for example, India and Finland, often given an exemption for industrial and commercial dividends only with the proviso that the company be domestically based. Once again, this represents an attempt to channel savings into socially appropriate uses, that is, to encourage investment locally rather than overseas. Ireland also gives a tax reduction, amounting to 20 per cent of the tax normally due, to interest and dividends derived by residents of Ireland from shares or securities issued by companies incorporated, managed, and controlled in Ireland. In addition, Swaziland grants a partial exemption of dividends received by residents from Swazi corporations; a percentage of dividends is deducted, the percentage declining as the taxpayer’s total income rises. Furthermore, in Italy a variety of temporary or permanent exemptions applies to interest on bonds and other debt instruments issued under various laws aimed at the encouragement of investment in agriculture, mining, industry, or low-cost housing, at the national or the regional level.

Exemption of interest received from deposits with state savings institutions reflects, in many countries, the British tradition of exempting from tax low-yield deposits with the British Post Office Savings Bank and Trustee Savings Bank. Such exempt income is subject to a ceiling of £40 in the United Kingdom but not in many other countries. Again, such deposits are usually small, and administrative considerations play a large part in their exemption.

Exemptions for commercial interest and dividends are usually allowed only up to a limited amount in order to encourage small savers to participate in the finance of local industry. In Finland, for instance, dividends and interest of up to Fmk 400 received by an individual from a Finnish company are exempt between 1969 and 1978.


The most popular types of saving eligible for tax deductions are contributions to pension and retirement funds and to life insurance schemes for oneself and immediate family members (Table 1). The deductions allowed are often subject to a ceiling expressed either absolutely or as a percentage of taxable income. Contractual saving that involves a long-term savings commitment generally receives the benefit of deductions, since it is difficult to avoid tax by alternate saving and dissaving. A question arises regarding the relative tax treatment of these types of savings media and that of social security. The usual policy with regard to social security is either that employee contributions are tax deductible but benefits are taxable (as in Canada) or that contributions are nondeductible and benefits are nontaxable (as in the United States).7 In general, similar treatment holds for life insurance and retirement schemes, but some countries exempt pensions received and make contributions to pension funds deductible as well. Examples of the latter are the Syrian Arab Republic, Malaysia, Turkey, and Cyprus.

Other types of deductions to encourage savings are restricted to a few countries; they usually cover a limited range of investments or are subject to other restrictions. In India, for example, savings deposited for 10-15 years in the Post Office Savings Bank are deductible, as are contributions to the Unit-Linked Insurance Plan of the Unit Trust of India, provided that money is not withdrawn until contributions have been paid for 5 years, subject to an overall limit on deductions. In Argentina, purchases of the debt instruments of electrical and agricultural cooperatives are deductible up to a ceiling of $a 1,000 and a minimum holding period of 2 years. In Costa Rica, the purchase of bank shares and of savings and loan shares at the National Housing Institute are deductible, subject to an overall ceiling on deductions.


A device to encourage saving that does not have the distributional drawbacks of exemptions and deductions is that of a tax credit, whereby the actual tax liability is reduced by a certain percentage of the amount subscribed or received, thus being of equal monetary value to all taxpayers, regardless of their marginal tax rate. Countries that operate tax-credit schemes are shown in Table 2. In Japan, a tax credit of 4 per cent is given for contractual savings with housing finance or other financial institutions up to a limit of ¥ 20,000. Under certain contracts of saving either for housing under long-term contracts or for the formation of employees’ assets, a tax credit of 8 per cent is allowed up to a maximum of ¥ 40,000. In India, subscribers to specified new issues of ordinary shares benefit from tax credits for that financial year and for each of the next three financial years. The amount of the credit varies with the amount subscribed, according to a sliding scale, up to a maximum of Rs 1,250 a year. In Austria, certain categories of resident individuals are allowed a credit or refund of income tax amounting to 15 per cent of the par value of bonds (including mortgage bonds and local government loans) purchased during the year. The refund applies only to bonds having a period remaining until maturity of at least 15 years, with a ceiling on purchases of S 100,000 per annum. In addition, deposits made in savings accounts opened under a housebuilding savings contract are entitled to a tax credit of 33⅓ per cent. The credit is repayable if the savings are withdrawn within 6 years for purposes other than acquiring or building a house.

The tax-credit mechanism seems to be most popular in Brazil and Colombia, both of which introduced savings incentives in the form of tax credits at the end of 1974. Brazil previously had a far-reaching system of percentage deductions for purchases of a wide variety of savings instruments, ranging from a deduction of 100 per cent for subscriptions to shares of corporations established in the less developed Northeast and Amazon regions and of corporations in the forestry or tourism sector to deductions of 20 per cent for purchases of debentures or deposits in savings accounts, subject to a maximum deduction of 50 per cent of income. Starting in 1975, a system of tax credits was adopted in which the credit given for any particular form of financial investment was uniform for taxpayers at all levels of income. These credits range from 42 per cent of the amount invested in shares of corporations in the Northeast and Amazon regions to 2 per cent for subscriptions to large savings accounts. In comparison with the previous system, the relative tax advantage gained by subscriptions to housing bonds, government securities, shares in tourism, and large savings accounts was reduced.

A major benefit from these schemes in Brazil is the capital gain that an investor can realize upon selling the investment at the end of the required minimum holding period of two years. The taxpayer can then reinvest and claim the credit over again. The problem with lengthening the period is that it makes these tax-privileged investments much less attractive and tends to lock investors into their existing portfolios. Although portfolio shifts among privileged assets could be allowed, unification of the currently diverse rates of credit would probably be necessary.

Colombia’s previous system featured exemptions for income received from interest on the public debt, on housing bonds, and—up to specified ceilings—on time and savings deposits and dividends. There was also a deduction—subject to a ceiling—for life insurance premiums. This system was replaced at the beginning of 1975 by a tax credit for dividends, distributions of mutual funds, and interest on savings accounts; individuals with a net wealth of less than Col$2 million may deduct 20 per cent of the first Col$40,000 earned from those sources. Exemptions are retained only for previously exempt bonds issued before September 30, 1974; there is no longer an exoneration for life insurance premiums. It is evident that the new system has a notch problem, this time in terms of wealth; those with wealth just below the ceiling of Col$2 million may be taxed very differently from those just above it.


Certain countries grant savings bonuses or premiums as a percentage of amounts that have been held in a particular form for a given period. Sweden was the first to experiment along these lines: savings held with a bank for a period of four to five years earned a tax-free bonus of 15 per cent to 20 per cent, with an annual savings limit. The scheme was later abandoned, however, the general conclusion being that it had generated very little, if any, new saving.8

Such bonus schemes are now in effect in the United Kingdom, the Netherlands, and the Federal Republic of Germany. In the United Kingdom, starting in 1969, regular monthly payments of a fixed amount (subject to a ceiling) over five years have earned a bonus of 14 monthly payments at the end of that time. On savings left invested for a further two years, a double bonus of 28 monthly payments is payable. These bonuses are all free of tax. The total balance outstanding at the end of 1974 was £380.1 million (excluding accrued interest), which was a small proportion of total National Savings outstanding.9 The Committee to Review National Savings concluded that the save-as-you-earn scheme had not been a success, largely because there were already attractive forms of contractual savings elsewhere, particularly life insurance and linked life insurance/mutual fund schemes, which also enjoy tax exonerations.10

The Netherlands has a varied system of savings bonuses. Under the general scheme, annual amounts of up to f. 250 held for five years earn a bonus of 20 per cent, subject to an income limit on participation. There are schemes for young people, civil servants, and employees of private concerns. For the latter, the company pays the bonus, which is exempt from income tax and social charges. One feature of the Netherlands system is the attempt to limit the benefits of the scheme to low-income small savers by ceilings both on the amounts that may earn bonuses and on the income level for eligibility. Estimates for 1970 indicate that of total household saving of f. 11 billion, f. 600 million was in a form that would earn bonuses.

The Federal Republic of Germany has the most widespread system of bonuses, which are discussed in detail in Section III. France also has some bonus schemes to encourage saving for housing, which are also discussed in Section III.

special low rates

Some countries treat certain types of income from capital leniently in comparison with other types of income. This paper makes no attempt to decide what is an appropriate rate structure for countries with schedular systems of income tax, but certain disparities are obvious and seem designed to encourage or channel savings. In Japan, most interest and dividend income may, at the taxpayer’s option, be taxed separately at rates varying, by type of interest or dividend, from 15 per cent to 25 per cent. Income taxed in this way is not included in the base of the general individual income tax, which has marginal rates ranging up to 75 per cent. Similarly, Haiti subjects dividends to a withholding tax of 10 per cent and does not include them in income subject to the general progressive tax, which ranges up to 50 per cent in its marginal rates. Spain has a somewhat narrower approach, exempting from the tax on income from capital 95 per cent of the interest on loans issued by concerns that are engaged in priority activities or in priority areas. This may be an attempt to equalize the cost of capital between the public and private sector, as many public sector bonds are tax exempt.

other incentives

Some countries’ systems of encouraging savings do not fit very well into the schemes of Tables 1 and 2. For example, Western Samoa exempts from taxation much income from capital, but includes it in calculating the appropriate rate, under its progressive system, at which other income is taxed. Norway exempts the first NKr 500 of income from a wide range of types of capital. Sweden has a similar system, granting an exemption of the first Skr400 for single persons, and Skr 800 for married couples. Canada exempts the first Can$ 1,000 of interest income from Canadian sources. Kenya exempts the first K Sh 50,000 of total pension and retirement annuities received by a resident individual in any year. Korea has a tax reduction scheme, whereby a person who does not own his own house, but has deposited installment-housing funds in a banking institution, can reduce his tax liability by the ratio of installment-housing funds deposited during the period to his income. This reduction is subject to a ceiling of 10 per cent of the amount of tax liability, with exceptions to this ceiling allowed for low-income persons.

Madagascar and Brazil relate tax incentives to the amount of savings outstanding in a particular form rather than the amount of new saving in any particular year. Madagascar allows a deduction of 20 per cent of the value of amounts on deposit with the National Savings Bank up to a maximum of 25 per cent of total income. Brazil grants a tax credit of 6 per cent up to a certain balance held with the savings banks, which generally form part of the housing-credit system; beyond this balance, the credit is reduced to 2 per cent. These approaches are analogous to the exemptions and deductions discussed earlier in that they augment the effective yield on these forms of savings, but they do it in a way that bears no relation to the amount saved in any particular year or to the yield on that saving.

All these forms of incentive serve to raise the effective rate of return on saving, or at least on particular assets in which savings can be held. Moreover, each of them involves revenue losses that, in some countries, are substantial. Yet, at neither the theoretical nor the empirical level have firm conclusions been reached as to whether changes in the rate of return have a positive or negative effect on the level of saving. An increase in the rate of return will affect saving in a variety of ways. There will be a substitution effect, inducing the individual to substitute future for present consumption, as the terms on which present consumption can be converted into future consumption have been improved. Therefore, the individual will be induced to save more out of present income. However, there will also be an income effect, as the increase in the rate of interest makes the individual better off. The income effect on saving cannot be given a definite sign. It will be negative for the target saver who wishes to accumulate a specified sum by a particular time or who wishes a specified income following retirement. The increase in the rate of return will enable him to save less and still reach the target.

There will also be other effects. If the saver already holds variable-rate assets (e.g., savings deposits), an increase in the rate of return will increase his current income. The effect of this is analogous to the income effect discussed earlier, and may be positive or negative. If he holds fixed-interest marketable securities, the increase in the rate of return may raise the discount factor that he applies to his future income stream, thereby reducing the present value of his future income and inducing him to save more. This effect is not likely to be important unless a wide variety of assets is made tax exempt. Otherwise, the effect on the discount rate will be small or insignificant. Thus, for the effects of a higher rate of return on saving to be negative, the income effects of a change in the rate of return must be negative and must outweigh the other two positive influences. The outcome will depend upon the importance of target saving, which may be of some significance in developed countries (particularly for contractual saving of the type widely favored for the granting of deductions) but its importance in less developed countries is questionable.11

The question has not been resolved at the empirical level. Wright12 finds that the substitution effect of changes in the net-of-tax rate of return exercises a substantial negative effect on current consumption in the United States, the elasticity being in the range from 0.18 to 0.27. Weber,13 however, finds that the positive income effect on consumption of a change in the interest rate more than offsets the substitution effect, although the model that he uses in specifying this equation involves a number of restrictive assumptions.

As regards less developed countries, Mikesell and Zinser14 note that econometric work has reached no firm conclusion but that there is a general consensus that “measured saving is [positively] responsive to changes in the real rate of interest.” Problems of collinearity with other variables have prevented any reliable quantitative estimates of this responsiveness being made. Mikesell and Zinser suggest that the explanation of the responsiveness to saving of increases in the real rate of interest may lie in the effects of monetary reforms (involving increases in the real rate of interest) on the level of investment and national income having, in turn, a positive effect on saving.15 If this is so, the incentives discussed earlier will not be effective unless their introduction is part of an overall package involving financial as well as fiscal changes.

The allocation of savings between outlets may well be more sensitive to relative rates of return than is total saving to the overall rate of return. It is clear from theoretical considerations of portfolio choice and from the experience of countries examined later that relative rates of return do play a significant role in affecting the distribution of savings between alternative savings media.

III. Country Studies

This section discusses in more detail the experience of three countries with fiscal incentives for saving. A brief survey of the specification of the consumption function in econometric models of each country is made to see if any influence of the rate-of-return factors on savings decisions has been found.

federal republic of germany

Outline of schemes and modifications over the period

Since 1948, the Federal Republic of Germany has pursued an active policy of encouragement of saving by private households, in which fiscal measures, on both the tax and expenditure sides, have played an important role. In the 1950s, deductions were allowed for four types of saving—subject to annual ceilings on the total amount of saving deductible. These categories were (a) savings for life insurance, (b) savings earmarked for the construction of dwellings, (c) direct savings accounts, and (d) saving by acquisition of securities. Approved securities cover a wide range of financial instruments, including the purchase of shares in investment funds, savings certificates, and bank savings bonds.

Up to 1955 a five-year commitment of the savings was required before they became tax deductible. In 1955 this commitment period was extended to ten years, but the growth of tax-encouraged savings, which had been rapid, slowed markedly, and the required commitment period was therefore reduced to three years.

Dissatisfaction with the distributional consequences of the system of deductions, particularly their greater value to higher-income households, led in 1959 to a substantial modification of the system. Under the Savings Premium Law, a system of bonuses was introduced for savings in the form of deposits in savings accounts and acquisition of securities, which could take the form of regular subscriptions or once and for all purchases or deposits, but deductions were no longer allowed. Bonuses were credited after savings had been held for five years with the savings institution, the latter being reimbursed by a credit from the revenue authorities. The bonus amounted to 20 per cent of the savings, with an annual maximum of DM 120 for single persons, DM 240 for married couples with up to two children, and DM 360 for married couples with three or more children. The Housebuilding Premium Law of March 1952 had introduced a similar optional system of bonuses for savings for housing. A saver could either claim a bonus on savings deposited with a building society or take any such deposits as a deduction, the bonus option being particularly useful to low-income families paying little or no income tax, and with low marginal rates. The bonus currently ranges between 25 per cent and 35 per cent of the amount saved, depending upon family size, with an annual ceiling of DM 400. The purpose of these deductions or bonuses is to encourage people to save in order to acquire their own home and to channel savings via the building and loan societies into the finance of home construction. Under the scheme to encourage savings for housing, bonuses are credited at the end of each year and are actually paid when the building and loan society grants a loan for house purchase. The savings, plus the accrued bonuses, can be used as a downpayment. The deductions for life insurance premiums have remained in effect throughout.

The system of savings incentives in the Federal Republic of Germany was modified during the 1960s, again in order to make the system relatively more advantageous for low-income persons and families. At the end of 1966, cumulation was prohibited so that a saver might avail himself of either the savings bonus or the housebuilding bonus or the tax privilege for saving through a building society, but not more than one of these in any calendar year. In 1967 the immobilization period for lump-sum savings deposits and security purchase was extended to six years, and that for installment saving to seven years.

In 1969 the Government introduced supplementary bonuses for lower-income savers. Savers with taxable incomes of less than DM 6,000 per annum (DM 12,000 for married couples) received a supplementary bonus of 40 per cent of the basic one. Subject to the same income limits, a supplementary bonus of 30 per cent of the basic bonus was introduced for housebuilding premiums.

Despite an increasing volume of saving in the form of savings deposits, the purchase of securities, and building society deposits (Table 3), the rate of household saving was still regarded as too low. Consequently, a law in 1961 sought to encourage employees to save by authorizing employers to deduct an amount of up to DM 312 per annum from employees’ wages, with a maximum of DM 468 for employees with three or more children. These amounts were to be free of wages tax (a prepayment of personal income tax) and social insurance contributions, and could be applied in a variety of ways, including savings accounts, deposits with building and loan associations, and loans to the employer. A law in 1965 required the employer to make these deductions if so requested by the employee. Initially, savings made under these latter capital-formation laws were counted toward the annual volume of savings that were entitled to bonuses under the Savings Premium Law discussed earlier. This requirement was abolished in 1969, after which one could save up to the ceiling of DM 312-468 and, in addition, receive the maximum amount of bonuses under the Savings Premium Law, if one’s savings under that scheme were sufficiently high.

Table 3.

Federal Republic of Germany: Amount and Type of Tax-Privileged Savings, 1955-74

(In millions of deutsche mark)

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Sources: Karl Hauser, “West Germany,” in Foreign Tax Policies and Economic Growth (New York, 1966), Table 9, p. 127; Deutsche Bundesbank, Monthly Report, Vol. 21 (June 1969), Vol. 27 (June and March 1975); Deutsche Bundesbank, Monatsberichte, Statistische Beihefte, Series 1, No. 5 (May 1975).

In 1970 the exemption from wages tax and from social insurance contributions was abolished; it was replaced by an employee savings bonus of 30 per cent of the amount invested. Again, the motivation was to distribute the benefits of the scheme more evenly between high-income and low-income taxpayers. The new law is known as the Third Law Promoting Wealth Formation by Employees, or the DM 624 Law. Families with three or more children were to receive a 40 per cent bonus, and the basic amount of eligible savings was doubled to DM 624, with a ceiling on income. Persons with incomes above the ceiling (initially DM 24,000 for individuals and DM 48,000 for jointly assessed spouses) are not entitled to the bonuses.

Deposits under the Savings Premium Law grew rapidly after the introduction of bonuses. The growth of deposits entitled to bonuses was faster than that of total savings deposits in the early and mid-1960s and again in the 1970s. Tax-privileged security holdings reached a peak in 1966. Figures for savings under the Laws Promoting Capital Formation by Employees are not available.


The schemes outlined earlier have been successful in fostering savings and the habit of saving throughout a broad spectrum of the population. According to the 1969 Income and Consumption Survey, about 8 million out of 20.5 million households held premium-carrying savings at the end of 1969. It was found that higher-income households used the government’s savings promotion arrangements to a greater extent than did lower-income households: the higher the income bracket, the larger the proportion of households that took part in the premium savings scheme. The same relation held when the total sample was classified into subgroups according to the occupation of the head of the household. It was found that savers with small balances tended to shy away from the long-term placements under the Savings Premium Law. It may be that savings provide precautionary balances, particularly for low-income families and that the usefulness of savings as precautionary balances falls when they are tied into a particular asset for a long period. Consequently, long-term placements would be particularly unattractive to low-income savers. It can be concluded that higher-income households tended to receive larger amounts under the form of bonuses than did lower-income households.

The same 1969 Survey revealed that the frequency of ownership of building society contracts rises with income more rapidly than do other types of savings—except for securities but including savings through savings deposits that carry bonuses. At the end of 1969, there were 4.7 million households who were depositing tax-privileged savings with building and loan associations but who had not yet been granted loans for house purchase. Of these households, 87 per cent took advantage of the bonus for such savings and the remaining 13 per cent took them as a deduction. When a division was made by occupational groups, only the percentages for the self-employed (66 per cent taking bonuses, 33 per cent deductions) and for households with a monthly net income of DM 1,800 or more deviated significantly from this overall average. About half of those savers applying for a bonus also applied for a supplementary bonus. The bonuses were distributed by occupational category in exact proportion to the share of each category in the total number of households that had savings contracts with building societies. The tax savings from the deduction provision benefited primarily the self-employed group, who accounted for nearly one half of the households that took the deduction but received almost two thirds of the tax savings. Similarly, when households were classified by income bracket, the distribution of bonuses received as between different brackets was remarkably uniform, but the tax savings from the deduction provision were concentrated in the higher-income brackets. This is what one would expect, since, as was noted earlier, deductions are of relatively greater advantage to the upper-income groups.

In 1970 about 7.6 million employees received capital-forming payments on the basis of collective agreements between employers and unions. Savings under the Wealth Formation Law gradually became more popular as it became possible to introduce them into collective bargaining agreements in 1965 and as bonuses were introduced in 1970. By 1971 the percentage of employees taking advantage of these laws was 14.5, as agreements came into effect in the civil service and building industry. A survey in 1970 by the Institute for Social Research and Social Economics found that, for half of all employees voluntarily adding to employers’ capital-forming payments, the employer’s collectively agreed payment was the decisive stimulus, particularly among the lower-income categories. It thus appears that collective agreements on capital-forming payments often provide the initial push for long-term savings in excess of the collectively agreed payments.

Again, it was found that participation in capital-forming saving increased as household income rose, even when households were classified by occupation. The 1969 Income and Consumption Survey revealed that the Government’s efforts to promote savings and capital formation had been more widely used by higher-income earners than low-income earners. This is not surprising, as households with higher incomes are more likely to save, and the housing deduction, at least, was worth more to them. Concern about a rising level of revenue losses (Table 4), and a desire to channel the benefits of government savings incentives to low-income households that had been taking relatively small advantage of them previously, led to the introduction in 1975 of income ceilings on eligibility for bonuses under the Savings Premium Law and Housebuilding Premiums Law—DM 24,000 a year for single persons and DM 48,000 a year for married couples, rising by DM 1,800 for each child under 17 years of age. These ceilings are high compared with per capita gross national product (GNP) for 1974 of approximately DM 16,000. The maximum amount of annual savings entitled to bonuses was set at DM 800 for single persons and DM 1,600 for married couples, with the rate of bonus amounting to 20 per cent plus 2 per cent for each child under 18. For building society savings, an additional bonus of 3 per cent was allowed. Additional bonuses for recipients of smaller incomes (discussed earlier) were dropped, as the scheme is already limited to people of low and moderate income.

Table 4.

Federal Republic of Germany: Cost to the Treasury of Savings Incentive Schemes

(In millions of deutsche mark)

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Sources: Der Bundesminister für Arbeit und Sozialordnung, Bericht der Bundesregierung über die Auswirkungen der Sparförderung, Druck-sache VI/3186, Sachgebiet 800 (Bonn, February 23, 1972), Chart 1, p. 5; Organization for Economic Cooperation and Development, Revenue Statistics of OECD Member Countries, 1965-72 (Paris, 1975).

Introduced in 1959.

Introduced in 1952.

Includes bonuses; bonus scheme introduced in 1971.

The introduction of income ceilings on all the savings schemes that grant bonuses has led to a substantial notch problem, similar to that mentioned earlier in the discussion of Colombia. The return on savings deposits for families whose income is just below DM 48,000 a year, particularly those with children, is substantially higher than for similar families with an income just above DM 48,000. Again, some form of sliding scale—whereby the premium payable falls as income rises—may be a better, if more complicated, solution.

Table 3 shows the amount and type of certain categories of tax-privileged savings. These figures include the majority of savings under the scheme for wealth formation by employees, which were largely invested in savings deposits and building society liabilities. During the period 1962-74, savings deposits that were entitled to bonuses under the various schemes grew at a compound rate of 21.5 per cent per annum, substantially faster than the annual growth rate of 14 per cent for total savings deposits. This differentially rapid growth was particularly marked in the early 1960s and in the period 1972-74. In the period 1966-72, the rate of growth of tax-privileged savings deposits was actually less than that of total savings deposits.

The amount saved in the form of securities, savings certificates, bank savings bonds, etc., reached a peak in 1966 (as noted earlier). The growth of deposits with building and loan associations was approximately the same as that of total savings deposits. As the former type of deposit is usually held only for a limited period, that is, until the house is purchased, whereas total deposits include a large proportion of long-term savings, this is evidence of the great popularity of savings for house acquisition or repair. It is generally agreed that the provisions encouraging such saving have been successful in promoting the spread of home ownership in the Federal Republic of Germany.

Table 4 shows the revenue impact of the savings incentives discussed earlier. (No estimate is available of the revenue losses stemming from the deduction of life insurance premiums.) The growing popularity of the various schemes is apparent, particularly the growth in coverage of the employee’s wealth-creation scheme. It is estimated that in 1973 the sum of bonus payments alone amounted to DM 6.5 billion.16 The steadily growing ratio of the revenue impact to the yield of personal income tax is equally clear. It was probably both revenue and equity considerations that motivated the introduction of maximum incomes above which premiums would not be payable on savings.

There appears to be no evidence at the aggregate level that these savings incentives have affected total household saving. In the Bonn Model of the Economy,17 a permanent-income hypothesis is used in which the propensity to consume out of permanent income is a function of a linear combination of several market interest rates, including the rate on savings deposits and on time deposits, both of which are endogenous to the model. Tax factors do not enter into their determination or into the manner in which they affect the consumption propensity. In the model of the Deutsche Bundesbank,18 household consumption is determined by a lagged function of net household income and a liquidity variable. Neither pretax nor posttax rates of return enter into the determination of household consumption.

Despite this lack of evidence at an aggregative level, and despite the evidence that high-income individuals have made the most use of them, it appears that these tax measures, as part of the overall effort to increase private saving, have helped to spread the savings habit to all levels of the population. The Deutsche Bundesbank notes that the bonus arrangements and the DM 624 Act have given a noticeable stimulus to the creation of personal assets on a broad basis.19


The reinforcement of personal saving has been an important priority in Japanese tax policy in the postwar period. The purpose of these inducements was to meet the financing requirements engendered by the rapid rate of capital accumulation.

Types of incentive

A wide variety of measures designed to ease the tax load on income from saving are in operation.

Certain types of income are altogether exempt from income tax. This exemption applies to interest from postal savings and bank demand deposits, the yield of which is generally low. Interest income or profit distribution from time deposits, joint operation trusts, public bonds and debentures, and investment trusts is exempt from tax as long as the principal does not exceed ¥ 3 million. In addition, Japan has a scheme encouraging wealth formation by employees that provides for regular deductions from their salaries. These deductions may be invested in a variety of ways, interest earnings or the distribution of profits earned by them being exempt from tax as long as the principal does not exceed ¥ 5 million. Per capita GNP in 1974 was about ¥ 1.2 million.

Various types of income from capital may be taxed separately at the taxpayer’s option. These are (1) interest on time deposits and the distribution of profits from securities investment trusts at 25 per cent; (2) dividends at 25 per cent as long as the recipient of the dividend owns less than 5 per cent of the equity of the domestic corporation paying the dividend and the amount of dividend paid to the recipient by the corporation is less than ¥ 500,000 in the year; and (3) dividends of up to ¥ 100,000 per annum at 15 per cent. By opting for separate treatment, the taxpayer can subtract these receipts from the base of the global personal income tax, which has marginal rates ranging up to 75 per cent. Interest on nonexempt demand deposits is withheld at source at the rate of 15 per cent and attracts no further tax. Subscribers to life insurance contracts are entitled to deduct the whole of the first ¥ 25,000 paid in premiums from the base of the personal income tax. Additional premiums are partially deductible following a sliding-scale formula, until a maximum deduction of ¥ 50,000 is reached for premiums totaling ¥ 100,000 or more.


Table 5 shows the pattern and evolution of revenue losses from the tax exonerations outlined earlier. These figures are budgetary estimates and are probably underestimates of the actual amount of revenue forgone. Nevertheless, the ratio of such estimated revenue losses to the personal income tax yield has fallen steadily since it reached its peak in the mid-1960s. In particular, losses from the separate taxation of interest and dividend income have not kept pace with total income tax revenue. One explanatory factor is the steady raising of the tax rate on interest income from 5 per cent in 1964 to 25 per cent in 1974. The rate of separate taxation of dividends has also been raised from 15 per cent in 1965 to 25 per cent in 1973. In addition, the low withholding tax rate on dividends was raised from 10 per cent to 15 per cent in 1967. Furthermore, as the ceiling for the full exemption of interest income from small savings was gradually raised from ¥ 500,000 in 1963 to ¥ 3 million in 1975, certain interest income benefited from this exoneration rather than from the separate taxation of interest income at low rates. The maximum amount deductible on account of life insurance premiums has risen from ¥ 2,000 in 1951 to ¥ 32,500 in 1965 to ¥50,000 in 1975.

Table 5.

Japan: Revenue Losses from Tax Incentives for Saving1

(In billions of yen)

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Sources: Ryutaro Komiya, “Japan,7 in Foreign Tax Policies and Economic Growth (New York, 1966), Table 10, p. 59; Organization for Economic Cooperation and Development, Revenue Statistics of OECD Member Countries, 1965-72 (Paris, 1975), Table 86, p. 162; data supplied by the Japanese Ministry of Finance.

Budgetary estimates.

A survey of three econometric models of the Japanese economy 20 showed that neither pretax nor posttax interest rate variables played a part in the determination of consumption, whether the consumption function was aggregative or disaggregated into various types of consumer expenditure. Explanatory variables were largely distributed-lag terms in disposable income and in relative prices for the disaggregated functions. In the Bank of Japan’s model, which had the most sophisticated monetary sector, the rates of interest on demand and time deposits did play a part in determining the change in total deposits. Again, the variables entered the equation through a distributed-lag mechanism, this time using Almon weights.21

Saving rates have been high in postwar Japan compared with those of selected industrial countries (Table 9). A number of fiscal factors have probably influenced the rate in an upward direction, including the policy of cutting taxes and the frequent raising of exemption levels. The system of tax exonerations for saving, or for the yield from saving, has also probably played a part, both in raising the effective yield on saving and in reducing the effective progressivity of the system, thereby channeling more disposable income toward those individuals more likely to save it.

france 22

It has been an established principle of French tax policy since 1950 that personal savings should be exempt from tax, and this principle has been put into practice in a variety of ways.

Types of incentive

In the 1950s, interest from a wide variety of government securities and savings bank deposits was exempted. Interest earned on deposits in building associations was exempted in order to channel larger amounts of individual savings into housing construction. In addition, the spread of life insurance as a form of saving was encouraged by the deductibility of premiums from the base of the progressive surtax on income.

During the 1960s the range of debt instruments bearing tax-free interest was narrowed to exclude interest from short-term bearer bonds and to reduce the number of tax-free government securities. The current system uses both deductions and exemptions, the latter being applicable to a variety of types of savings media.

The only savings medium to which a deduction is applicable is life insurance, for which deductions have been in force since 1951. The system in use has become somewhat complicated over the years. Contracts entered into between 1950 and 1958, providing for a lump-sum payment in the event of death before a certain age, are entitled to a deduction, subject to an annual ceiling of F 400 (increased by F 100 for every child) and of 10 per cent of the subscriber’s income. Most life insurance contracts, however, including those providing for payments when the insured person reaches a certain age or upon his death, are subject to the deductions outlined in Table 6. In 1970, 15 per cent of households took advantage of these deductions; the percentage among households with income large enough to be taxable was 21 per cent. The deduction was most widely used by professional people and by civil servants in the upper and middle ranges. The average deduction among professional people taking the deduction was F 1,422. Among higher-level civil servants, the figure was F 874 and for those in the middle level, F 545. As one would expect, both the percentage of households taking advantage of the deduction and the amount of the deduction taken rose with taxable income (Table 7). It was found that, in the lower-income brackets, the deduction was taken more frequently by households not paying taxes. The explanation is that if two households have the same gross income but one pays taxes and the other does not, it is because one has a larger number of children, and thus has a lower, or no, tax liability. Furthermore, the household with children is more likely to purchase life insurance, and the ceiling on deductions rises with the number of children (Table 6). The combined effects of these two factors made many households with relatively small gross incomes not liable to income tax at all.

Table 6.

France: Ceilings on Allowable Deductions for Life Insurance Premiums, 1974

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Source: Ministère de l’Economie et des Finances, “Deuxième Rapport du Conseil des Impóts,” Statistiques et Etudes Financières (série bleu), No. 311 (November 1974), Table 40, p. 63.
Table 7.

France: Life Insurance Premiums—Frequency and Average Amount of Deductions Taken, 1970

(In francs)

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Source: Ministère de l’Economie et des Finances, “Deuxième Rapport du Conseil des Impôts,” Statistiques et Etudes Financières (série bleu), No. 311 (November 1974), Table 49, p. 69.

T: households paying taxes.

NT: households with no taxable in ome.

The revenue loss from the deductibility of life insurance premiums was about F 430 million in 1970, amounting to an average reduction in taxes of F 23 per household. The benefit was unevenly distributed among socioeconomic groups, ranging from F 109 per household among professional groups to F 7 per household among industrial workers and to F 4 per household among agricultural workers.

Exemptions from personal income tax include the yield from a wide variety of types of financial capital. The types of income thus benefited are given next, and an estimate of the revenue cost of such exemptions is given in Table 8.

Table 8.

France: Incomes Exempted or Deductible and Revenue Effects, 1970

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Sources: Ministère de l’Economie et des Finances, “Deuxième Rapport du Conseil des Impôts,” Statistiques et Etudes Financières (série bleu), No. 311 (November 1974); author’s estimates.

Numbers refer to position of item in text listing.

Includes bonuses.

(1) There is an exemption for interest on fixed-interest obligations issued in France and quoted on a French stock exchange, as long as they do not benefit from an indexation clause. The ceiling on exempt income in 1975 was F 2,000, raised from F 500 in 1965. In 1970, 9.5 per cent of households received income from these types of obligation amounting to 0.75 per cent of total taxable household income. Exempted income as a percentage of taxable household income varied inversely with the size of the income, as one would expect, because of the ceiling on the exoneration. Since higher-income households were taxed at higher rates, the beneficial effect of exoneration was approximately proportional to posttax income. This result suggests that the imposition of ceilings on the amount of exemption or deduction (rather than on the eligible income) is the best means of reconciling the conflict between the promotion of savings through exemptions and deductions and the adverse distributional effects thereof.

(2) Interest on passbook savings with savings banks is exempt from income tax. This is the most expensive single tax exoneration for savings in France (Table 8). Between 1965 and 1972, such interest rose from F 1,542 million a year to F 6,325 million, at a revenue cost growing from F 185 million to F 759 million.

(3) Interest on savings for housing held in special accounts is exempt from tax. In addition, a bonus is paid by the Government when a loan for house purchase is made, thereby increasing the downpayment. In 1971, the cost of the interest exoneration plus the bonus was F 67 million, and in 1972 it had reached F 109 million. This was so because the amount of deposits under this scheme had grown rapidly from its inception in 1966, amounting to F 4.9 billion in 1969 and to F 8.6 billion in 1972.

(4) Interest earned on sums subscribed regularly toward house purchase under a savings plan is exempt from income tax. This exoneration covers contractual savings schemes, whereas (3) is applicable to lump sums and other noncontractual deposits. In 1970 such interest amounted to F 90 million, the cost of the exoneration being F 19 million. Since that time, the scheme has grown rapidly in popularity: the amount of deposits was F 16.9 billion in 1972, against F 2.3 billion in 1970, and the revenue loss had expanded to F 134 million. Since 1972 a system of bonuses for such savings has also been introduced.

(5) Redemption premiums of debt instruments issued in France are not included in the income tax base, being subject only to a withholding tax of 12 per cent. Such premiums amounted to F 618 million in 1970, at a revenue cost of about F 173 million.23

(6) Interest on a limited range of public sector (mostly state) securities is exempt from tax. The amount of this interest was about F 400 million in 1970, at a revenue cost of about F 120 million.24

(7) Construction bonuses received by shareholders of real estate investment trusts are not taxable. Additionally, dividends distributed by these trusts, and by other companies concerned with real estate, benefit from a 20 per cent deduction in calculating taxable income. These provisions reduced the base of the personal income tax by F 55 million in 1970, entailing a revenue loss of about F 22 million.25

(8) Income received by employees under schemes whereby the profits of the enterprise in which they work are distributed to them (largely in the form of stock) is not taxable. Such income amounted to F 1.4 billion in 1970, entailing an estimated revenue loss of F 420 million. By 1973 such income was estimated to have increased to F 2.4 million.

(9) Income from financial assets acquired as part of a long-term savings commitment is exempt from income tax. The amount committed in any year by a saver must not exceed one fourth of his average taxable income over the preceding three years, with an annual ceiling since 1973 of F 20,000 for each household. It has been estimated that such income amounted to F 87 million in 1970, giving rise to a revenue loss of F 35 million. By 1972 the exempt income was estimated to be F 154 million, and the revenue loss F 62 million, as the amount of such saving rose from F 0.9 billion in 1969 to F 3.1 billion in 1972.

(10) The income from an employee’s share in a collective portfolio—set up pursuant to a savings plan whereby employees invest in the enterprise in which they work—is exempt from income tax as long as it is reinvested. This minor provision reduced the base of the income tax by F 8 million in 1970, entailing a loss of revenue of about F 2 million.26


The importance of the exemptions can be gauged by considering the relative proportion of income thus exempt to total income from financial capital received by households (Table 9).27 Benefiting from the provisions discussed earlier, 40 per cent of such income was completely exempt, and a further 27 per cent was subject only to a withholding tax of 25 per cent. Only one third was included in the base of the progressive income tax. Thus, the various measures introduced to stimulate saving play a significant role in reducing the progressivity of the personal income tax.

Table 9.

France: Fiscal Treatment of Income from Financial Capital Received by Households, 1970

(In billions of francs)

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Source: Ministère de l’Economie et des Finances, “Deuxième Rapport du Conseil des Impôts,” Statistiques et Etudes Financières (série bleu), No. 311 (November 1974), Table 61, p. 75.

Categories (2) through (10) in the text.

A paradoxical finding is that, in 1965, households with no tax liability received a higher proportion of their income from financial capital from assets whose yield was tax free than did households that did have a tax liability.28 Admittedly, the receipt of income in this form probably kept many of these households from having any liability. However, their net income would presumably have been higher had they invested in higher-yield, taxable instruments; the applicable tax rates would have been in the lower range, as taxable income would still, in most cases, be quite low. On the other hand, this finding may reflect a strong preference for liquidity, or risk aversion, by low-income households, which induces them to hold whatever savings they may have in the form of the tax-exempt assets—generally riskless and fairly liquid, such as passbook savings. This result nevertheless does cast some doubt on the importance of tax factors in France even in portfolio decisions.

A survey of econometric models of the French economy failed to reveal any significance for the rate of return on savings (pretax or posttax) in determining household consumption. The OECD model29 disaggregates the consumption function and specifies it in first-difference terms. Explanatory variables are stocks and lagged consumption (based on a “permanent income” approach) without any rate-of-return variable influencing either the formation of permanent income or the propensity to consume out of permanent income. The Deca model determines consumption in nominal terms according to household disposable income and the price of consumer goods.30 In Star, the relevant margin is not consumption versus saving, but consumption versus investment in housing versus the acquisition of financial assets.31 Consumption is determined by disposable income and the amount of consumer credit. Although financial variables are present in the model, they are specified in terms of flows of funds, and interest rates do not play a role in determining such flows.

In FIFI, household saving depends positively upon disposable income, negatively upon price movements, and positively upon investment in housing by households, which is considered exogenous.32 The structure of revenues by social or professional category and the effect of interest rates on the choice between consumption and financial assets are discussed, but they have not, as yet, entered into the formulation of the model.

IV. Concluding Remarks

From the empirical work discussed in earlier sections, one can find no evidence of any responsiveness of aggregate saving to the rate of return. Nevertheless, it could be that the models studied, often constructed largely for forecasting purposes, are not sufficiently detailed to pick up any such effects. A look at household saving ratios in selected countries (Table 10) shows that countries with a relatively lenient tax treatment of savings do have higher saving ratios. All three countries considered in detail in Section III had high household savings ratios, which have risen steadily since 1950. Some such rise is evident in all the countries studied, but the rise was sustained into the 1970s in the Federal Republic of Germany, France, and Japan, in contrast to the experience in the United Kingdom. In Italy, where the tax system is less progressive than any of the others considered, proportionately less is taken from high-income households, which are more likely to save.33 This suggests that the effect of the savings incentive schemes in the countries studied may be the result of their reducing the effective progressivity of the income tax system. The evidence from the countries studied is that these measures may be effective as part of an overall policy aimed at augmenting personal saving, both in order to finance the growing level of investment and to achieve wider social policy objectives, particularly the accumulation of assets by moderate-income households. It is also clear that attempts to channel savings in specific directions have been successful, particularly measures to encourage the accumulation of savings for house purchase.

Table 10.

Selected Countries: Revenue Losses and Saving Rates

(In per cent)

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Sources: Tables 4, 5, and 8; Organization for Economic Cooperation and Development, National Accounts of OECD Countries, 1950-68, 1961-72, 1962-73; United Kingdom, Committee to Review National Savings, Report (Cmnd. 5273, London, 1973), p. 29; U.S. Treasury Department, Annual Report of the Secretary of the Treasury on the State of the Finances (1968), pp. 339-40; author’s estimates.

Ratio of saving to disposable income after taxes and social security payments.



Incentives included comprise relief on life insurance premiums, relief on employee’s contributions to retirement schemes, retirement annuity relief, interest on National Savings Certificates, terminal bonus on British Savings Bonds, premium bonds, and save-as-you-earn schemes.

Incentives included comprise exclusion of taxes on state and local bonds held by individuals, tax-privileged retirement plans for the self-employed, and exclusion of interest on life insurance savings.

The requirements of minimum holding and subscription periods, introduced to prevent tax avoidance under deduction and bonus schemes, have probably lengthened the maturity structure of household assets in those countries where they have been introduced.

If a country’s main purpose is to affect the allocation of savings, it is best to concentrate tax exonerations on a narrow range of assets, for example, accumulation for housebuilding or for investment in particular industries or regions. If the aim of the authorities is to augment the overall rate of household saving, a number of problems arise: (1) the range of the privileged assets will probably have to be rather wide, entailing substantial revenue losses; (2) in addition, if exemptions or deductions are used, there will be regressive distributional consequences; (3) even with a system of bonuses, as in the Federal Republic of Germany, much of the benefit will go to middle-income and higher-income households, which would have saved without the tax exemption.

The problem of the regressive nature of most of the schemes introduced to enhance saving has been tackled in a variety of ways. The most usual has been to place an annual ceiling per household on the amount of allowable exemptions, deductions, or bonuses. This strategem has the advantage of keeping the revenue loss within bounds as the schemes become more popular. Such a ceiling may be combined with, or replaced by, an income ceiling on eligibility for the exemption, deduction, or bonus. Such ceilings may improve vertical equity, but they have the effect of introducing a horizontal inequity. Households immediately below the ceiling can gain a higher return on the same amount of saving than can households immediately above. Such “notch” problems can be mitigated by introducing a “disappearing” exemption, deduction, or bonus, which diminishes according to a sliding scale as income rises, but this usually poses administrative problems. The last solution is to avoid income ceilings but to keep the maximum allowable exemptions, deductions, or bonuses low, thereby minimizing the advantages that high-rate taxpayers gain from the scheme, while providing encouragement for low-income small savers and limiting the ensuing revenue losses.


Special Drawing Rights: Renaming the Infant Assetjoseph gold (pages 295-311)

The name “special drawing right” (SDR) was given to the new reserve asset allocated by the Fund as a compromise with some negotiators, mainly French, who wished to emphasize at the time that it was more in the nature of credit. The name has been criticized as being dull and unrevealing. The Committee of Twenty proposed that the characteristics of the SDR should be improved so that it could become the principal reserve asset of the system, and that one of the improvements might be a better name. New names were advanced in meetings of the Deputies of the Committee, and after the first Outline of Reform was published, many suggestions were made in the press and by the public. This experience recalls the similar experience that preceded the establishment of the Fund, when for a time Lord Keynes proposed “bancor” and Harry Dexter White proposed “unitas” as the name of a new monetary unit to be associated with the Fund. On both occasions, much ingenuity was devoted to the search for a new name. Indeed, for many centuries, monetary experts have written about a universal money that would bear a name of their choice. The forthcoming amendment of the Fund’s Articles of Agreement will provide for improvements in the SDR and for extensions of its use, but the original name has become too well established to be replaced.

Exchange Rate Stability and Managed Floating: The Experience of the Federal Republic of Germanyjacques r. artus (pages 312-33)

The present study deals with the nexus between short-term interest rates, private monetary capital flows, and the exchange rate under managed floating. It questions the belief held by many economists that capital flows necessarily have benign effects that prevent large erratic movements in the exchange rate from taking place. It also analyzes the likely implications of interventions by central monetary authorities in the foreign exchange market and in the domestic money market. The Federal Republic of Germany, over the period March 1973 to July 1975, is singled out as the case study.

The approach employed in the study is to specify a model of the balance of payments of the Federal Republic of Germany including the demand for and the supply of base money as well as policy reaction functions explaining the central bank net demand for domestic assets (monetary policy) and foreign assets (intervention policy). The core of the model consists of equations that explain private monetary capital flows and their interdependence with the exchange rate. Lessons as to the working of the floating regime are derived from the estimates obtained for certain parameters, in particular, those that determine how exchange rate movements are affected by changes in monetary policy and various external shocks.

The major finding of the study is that the experience of the Federal Republic of Germany with floating does not bear out the faith that many economists have had in the stabilizing role of short-term capital flows. Relatively small variations in the interest rate differential between Frankfurt and the Euro-dollar market have led to large fluctuations in the exchange rate. This raises serious implications as to the international consequences of having a major industrial country following an independent monetary policy under a floating rate regime.

The Exchange Rate as an Instrument of Policy in a Developing Countryomotunde e.g. johnson (pages 334-48)

Changes in the exchange rate can be used (a) as an instrument of monetary adjustment where there is an excess supply of money; (b) as a device to tax (subsidize) asset accumulation in the public sector; (c) as an instrument to impose a once and for all wealth tax on some producers in the private sector and to give a once and for all subsidy to other producers; and (d) as an instrument to induce long-run shifts of resources from some sectors to others.

For devaluation to have real effects (apart from those that are due to wealth distribution between the government and the private sector), it must result in a fall in real absorption, given real income. In the monetarist framework, the fall in real absorption comes about through a fall in real money balances. It is argued that, contrary to some recent monetary models, the changes in relative prices that occur as a result of the fall in absorption have wealth effects in the less developed countries and that these wealth effects have long-run consequences for the structure of these economies. The foregoing arguments will hold even in the absence of money illusion among wage earners.

Dual Exchange Markets Versus Exclusive Forward Exchange Rate Supportwilliam h.l. day (pages 349-74)

This paper compares two mechanisms of official intervention in the foreign exchange market that provide a stable exchange market accessible to traders while insulating the money supply and reserves by the inducement of capital inflows (outflows) equal to the trade deficit (surplus). The first policy involves the establishment of a dual exchange market, giving official support exclusively to the commercial market, and official sales (purchases) of domestic currency resulting from support operations in the commercial market offset by official purchases (sales) of domestic currency in the free financial market. The second policy entails exclusive forward exchange rate support in a unitary market, a free spot exchange rate, and official forward sales (purchases) of domestic currency resulting from support operations in the forward market offset—on maturity—by official purchases (sales) of domestic currency in the free spot market.

The main findings of the paper are as follows: (1) The capital flows that are induced are uncovered under the dual market system but covered under the unitary market system. (2) Larger changes in the spread between the free and supported exchange rates occur under the dual market system. (3) Under the dual market system, changes in the spread are likely to have a detrimental impact on both leads and lags, and evasion; under the unitary market system, those changes are likely to have a stabilizing impact on leads and lags, and are unlikely to encourage forward market speculation. (4) To deter forward market speculation under the unitary market system would require administrative controls to monitor only forward contracts; deterring evasion under the dual market system requires more extensive administrative controls that monitor both spot and forward contracts.

The dual market system relies on the inducement of speculative (that is, uncovered) capital flows but is threatened by illegal arbitrage between the supported and free markets. In contrast, the unitary market system relies on the inducement of covered arbitrage capital flows but is threatened by speculation between the supported and free markets. Given that individuals are averse to risk, a system that relies on riskless operations but is threatened by risky operations will work more effectively than a system that relies on risky operations but is threatened by riskless operations.

The Euro-Currency Market: An Attempt to Clarify Some Basic Issuesandrew d. crockett (pages 375-86)

Much analysis of the Euro-currency market has used the familiar credit-multiplier framework from the conventional treatment of domestic banking systems. Such a framework assumes that the ratio of reserve assets to the total balance sheet of the system is fixed, and that the quantity of reserve assets is controllable, or at least predictable. While these conditions hold reasonably well in a closed economy where the banking system is subject to exogenously determined reserve requirements, they do not hold in an open system without reserve requirements, such as the Euro-currency market. Any search for fixed multipliers, therefore, is likely to be a will-o’-the-wisp, and it is not surprising that widely different multipliers have been estimated.

Since Euro-currency assets and liabilities are closely substitutable for comparable domestic instruments, the Euro-currency market must be viewed in the context of overall portfolio equilibrium, and its size is ultimately influenced by the same policy instruments that the authorities use to control domestic monetary aggregates. The lack of specific controls over the Eurocurrency market does not therefore mean that its expansion either has been or will be immune to the conventional instruments of monetary control.

A Note on Reserve Use Under Alternative Exchange Rate Regimesesther c. suss (pages 387-94)

Under the present exchange rate system of managed floating, countries have the choice between allowing the exchange rate to respond to market forces and intervening in the market. While it is tautologically true that under a freely flexible exchange rate system there is no need for reserves, it is not possible a priori to state whether there will be a reduction in reserve use, given a movement toward more flexible exchange rates.

This paper examines for 14 industrial countries their reserve use during a period of relatively fixed rates, and compares those figures with their reserve use during a period of managed floating. Since there is no standardized definition of reserve use that can be readily obtained from published data, several measures of reserve “use” have been calculated. If conflicting results are obtained from the different measures, this underscores the difficulty in analyzing this issue, while if consistent results are obtained from a majority of the measures, there will be a degree of confidence in drawing conclusions.

The results obtained from the various measures indicate that 7 countries had reduced reserve use in the floating period, 3 countries had increased use, and the remaining 4 countries had mixed results. The overall conclusion drawn from the analysis is that reserve use has generally declined during the period of managed floating, but not by a large magnitude.

Integration of Fiscal and Monetary Sectors in Econometric Models: A Survey of Theoretical Issues and Empirical Findingsnurun n. choudhry (pages 395-440)

Modern quantity theorists, better known as monetarists, appear to have made substantial contributions to the current debate on the effects of alternative fiscal and monetary policy actions. Both the theoretical and empirical works of the monetarists have challenged the basic Keynesian tenet that changes in government spending affect the level of employment and income. The monetarists argue that perverse wealth effects of government deficit spending “crowd out” private spending if it is financed by borrowing from the public.

This paper briefly but critically surveys the current literature on the monetarist controversy and focuses attention on the impact of alternative methods of financing government deficits by incorporating a government budget constraint. Such a constraint properly accounts for the injection of new money and bonds into the company resulting from fiscal policy actions. The incorporation of such a constraint in the IS-LM framework affects both the IS and LM curves simultaneously and thus properly accounts for the crowding-out effects, if there are any, of fiscal actions.

Next, it turns attention to the ways in which some of the existing econometric models have incorporated the government budget constraint in their IS-LM frameworks. The paper states that the integration of fiscal and monetary sectors in econometric models can be carried out without explicitly specifying such a constraint, provided that certain conditions are met to ensure the existence of an implicit government budget constraint. Although most of the econometric models surveyed do not explicitly specify a government budget constraint, a majority of them appear to have satisfied the conditions for its implicit existence reasonably well.

Finally, the paper discusses the evidence of the crowding-out effects on the basis of the simulated dynamic multipliers associated with alternative fiscal and monetary actions as obtained from the above-mentioned econometric models. The evidence suggests that both fiscal and monetary policy actions cause crowding-out effects in the long run.

The Sensitivity of the Yield of the U.S. Individual Income Tax and the Tax Reforms of the Past Decadevito tanzi (pages 441-54)

The elasticity and built-in flexibility of the U. S. individual income tax to changes in national income (referred to as the sensitivity of the tax) have been of particular interest to researchers and policymakers for a long time. The direct measurement of this sensitivity has always been difficult because of frequent statutory changes. For this reason a time-series approach, although it has been used by several economists, has always had to overcome considerable difficulties and was often not too reliable. Consequently, many researchers have attempted to measure this sensitivity by use of cross-sectional data. The present paper uses a cross-sectional approach based on individual income tax data reported by states for the United States. By the use of this method, developed a few years ago by the author, the paper estimates the impact that the Tax Reform Acts of 1964, 1968, and 1969 had on this sensitivity.

The elasticity of tax revenue with respect to taxable income and the elasticity of taxable income with respect to adjusted gross income are estimated separately. As far as the first of these elasticities is concerned, it is shown that the most important change in this “rate structure elasticity” occurs after the 1964 Tax Reform Act. Not much change appears to have taken place over the period in the elasticity of taxable income with respect to adjusted gross income. Thus, the combination of these two estimates of elasticities gives an overall elasticity of the tax with respect to adjusted gross income that increases somewhat between 1963 and 1972. As far as the flexibilities are concerned, they do not seem to have been overly affected by the various tax reforms; for 1972, the built-in flexibility of the tax with respect to adjusted gross income was approximately 18 per cent—the same as for 1963. The paper concludes by comparing the result thus obtained with those obtained by Pechman, who used a different method and different data. It is shown that the results obtained in the present paper are practically identical to Pechman’s.

Fiscal Incentives for Household Savingwilliam j. byrne (pages 455-89)

High priority is attached, in both developed and less developed countries, to augmenting the rate of domestic saving. This paper considers experience with various types of fiscal inducement for household saving. These inducements enter the tax system either as deductions or credits for subscriptions to different types of savings media or as exemptions for the return on certain types of assets in which savings are held. The most commonly granted exemption is for the income from public sector bonds, both to encourage purchases of public debt instruments and to reduce their interest costs. Certain countries exempt other types of interest and dividend income, especially interest on time and savings deposits. Deductions are granted most frequently for contributions to pension and retirement funds and for life insurance premiums, which involve contractual commitments and are, therefore, less open to abuse by means of alternate saving and dissaving. Credits are growing in popularity because they are more equitable between persons of different levels of taxable income. In addition, certain countries grant savings bonuses or premiums as percentages of amounts saved and held in approved forms. Various measures have been introduced to mitigate the possibly regressive income-distributional impact of these schemes, especially ceilings on the amount of deductions or exemptions or upon the income level below which these incentives can be utilized.

These incentives are in force in a large number of countries, despite the lack of firm theoretical or empirical conclusions with respect to their effect on the aggregate level of saving. Experience in three countries—the Federal Republic of Germany, Japan, and France—in which such incentives have been widely used is examined in more detail. It is concluded that fiscal incentives for household saving may be effective as part of an overall policy aimed at augmenting personal saving. This, however, may be the result of the reduction in the effective progressivity of the tax system caused by such incentives. Also, attempts to channel saving into specific uses have been successful.


Droits de tirage spécial: un nouveau nom pour le jeune avoir?joseph gold (pages 295-311)

Le nom “droit de tirage spécial” (DTS), donné à l’avoir de réserve distribué par le Fonds monétaire, résulte d’un compromis, avec certains négociateurs, notamment français, qui souhaitaient mettre l’accent sur le fait qu’il se rapproche davantage d’un crédit. On a reproché à ce nom d’être plat et peu évocateur. Le Comité des Vingt proposa d’améliorer les caractéristiques du DTS pour en faire le principal avoir de réserve du système et suggera qu’une des améliorations pourrait être de lui donner un meilleur nom. De nouveaux noms furent avancés au cours des réunions des suppléants du Comité, et après la publication du premier Plan de réforme, de nombreuses suggestions furent faites dans la presse et par le public. Cet épisode n’est pas sans rappeler un épisode similaire qui se déroula pendant la période qui précéda la création du Fonds, lorsque pendant un certain temps Lord Keynes proposa le nom de “bancor” et Harry Dexter White celui d’“unitas” pour une nouvelle unité monétaire qui serait associée au Fonds monétaire. En ces deux occasions, beaucoup d’ingéniosité fut consacrée à la recherche d’un nouveau nom. Du reste, depuis des siècles, les experts monétaires rêvent d’une monnaie universelle qui porterait le nom de leur choix. Le deuxième amendement des statuts du Fonds monétaire prévoit des améliorations du DTS et des extensions de son utilisation, mais le nom originel est trop bien établi pour qu’on puisse le remplacer.

Stabilité du taux de change et flottement dirigé: l’expérience de l’Allemagne fédéralejacques r. artus (pages 312-33)

L’étude traite des relations d’interdépendance entre les taux d’intérêt à court terme, les mouvements de capitaux monétaires privés et le taux de change en régime de flottement dirigé. L’auteur conteste la théorie, défendue par de nombreux économistes, selon laquelle les mouvements de capitaux ont obligatoirement des effets bénins qui empêchent toute fluctuation erratique majeure du taux de change. Il analyse aussi les implications probables des mesures d’intervention des autorités monétaires centrales sur le marché des changes et sur le marché intérieur. Le cas de la République fédérale d’Allemagne entre mars 1973 et juillet 1975 est choisi en exemple.

L’approche retenue consiste à spécifier un modèle de la balance des paiements de l’Allemagne fédérale qui comprend la demande et l’offre de monnaie de base ainsi que des fonctions d’adaptation des politiques qui expliquent la demande nette d’actifs intérieurs (politique monétaire) et extérieurs (politique d’intervention) exercée par la banque centrale. Les équations principales du modèle sont celles qui expliquent les mouvements de capitaux monétaires privés et leurs relations d’interdépendance vis à vis du taux; de change. Certaines conclusions quant au fonctionnement du régime de flottement sont tirées des estimations obtenues pour certains paramètres, particulièrement ceux qui déterminent la façon dont les mouvements du taux de change sont influencés par l’adaptation de la politique monétaire et par les divers chocs extérieurs.

La principale conclusion de l’étude est que l’expérience de l’Allemagne fédérale en matière de flottement ne confirme pas la théorie de nombreux économistes quant au rôle stabilisateur des mouvements de capitaux à court terme. On a constaté que des variations minimes du différentiel d’intérêt entre le marché monétaire de Francfort et le marché de l’euro-dollar provoquaient de fortes fluctuations du taux de change. Ce phénomène risque d’avoir de sérieuses conséquences au plan international lorsqu’un grand pays industrialisé applique une politique monétaire indépendante en régime de taux flottants.

Le taux de change, instrument de politique d’un pays en développementomotunde e.g. johnson (pages 334-48)

Les fluctuations du taux de change peuvent être utilisées à diverses fins: a) en tant qu’instrument d’ajustement monétaire lorsque la masse monétaire est excédentaire; b) en tant que mécanisme pour taxer (subventionner) l’accumulation de capital dans le secteur public; c) en tant que dispositif pour imposer de façon définitive la fortune de certains producteurs du secteur privé et subventionner une fois pour toutes d’autres producteurs et d) en tant qu’instrument pour provoquer des transferts de ressources à long terme entre secteurs.

Il faut, pour que la dévaluation exerce des effets réels (exception faite de ceux engendrés par la répartition des richesses entre les secteurs public et privé), qu’elle se traduise par une chute de l’absorption réelle, le revenu réel étant donné. Les monétaristes soutiennent que cette chute provient d’un effondrement des balances monétaires réelles. Il est avancé que, contrairement à certains modèles monétaires récents, les fluctuations des prix relatifs résultant de la chute de la consommation ont des effets de richesse dans les pays moins développés et que ces effets influent à long terme sur la structure de ces économies. Les arguments précédents sont valables même en l’absence d’une illusion monétaire chez les salariés.

Double marché des changes ou soutien exclusif des taux de change à termewilliam h.l. day (pages 349-74)

L’étude compare deux modes d’intervention des autorités monétaires sur le marché des changes, qui fournissent un marché stable au secteur commercial et qui, en même temps, isolent la masse monétaire et les réserves en induisant des entrées (sorties) de capitaux égales au déficit (excédent) commercial. La première de ces deux politiques implique la mise en placed’un double marché des changes, le soutien étant accordé exclusivement au marché commercial, et des ventes (achats) officiel les de monnaie nationale résultant des opérations de soutien sur le marché commercial qui sont compensées par des achats (ventes) officiels de monnaie nationale sur le marché financier libre. La deuxième comporte le soutien exclusif du taux de change à terme sur un marché unique, un taux de change au comptant libre, et des ventes (achats) officielles à terme de monnaie nationale résultant des opérations de soutien dans le compartiment des changes à terme qui sont compensées—à l’échéance—par des achats (ventes) officiels de monnaie nationale sur le marché au comptant libre.

Les principales conclusions de l’étude sont les suivantes: 1) les flux de capitaux qui sont induits se réalisent sans couverture dans la formule du double marché et avec couverture dans celle d’un marché unique. 2) Les variations de l’écart entre le taux de change libre et le taux soutenu sont plus fortes dans le cas du double marché. 3) Dans la formule du double marché, les variations de l’écart ont probablement un effet défavorable tant sur le termaillage que sur l’évasion des capitaux; dans le système du marché unique ces variations ont probablement un effet stabilisateur sur le termaillage et il est probable qu’elles n’encouragent pas la spéculation sur le marché des changes à terme. 4) Pour décourager la spéculation sur le marché des changes à terme, dans la formule du marché unique, il faudrait un dispositif administratif de contrôle pour surveiller les opérations à terme uniquement; pour décourager l’évasion des capitaux, dans la formule du marché unique, il est nécessaire d’exercer un contrôle administratif plus étendu afin de surveiller tant les opérations au comptant que les opérations à terme.

La formule du double marché repose sur des mouvements induits de capitaux spéculatifs (c’est-à-dire sans couverture) mais il est menacé par l’arbitrage illégal entre le marché soutenu et le marché libre. A l’inverse du double marché, le marché unique repose sur des mouvements induits de capitaux d’arbitrage avec couverture, mais il est menacé par la spéculation qui s’opère entre le marché soutenu et le marché libre. Etant donné qu’il répugne aux hommes de prendre des risques, un système qui repose sur des opérations sans risques mais est menacé par des opérations risquées fonctionnera plus efficacement qu’un système qui repose sur des opérations comportant des risques mais est menacé par des opérations sans risques.

Analyse du marché des euro-monnaies: tentative d’explication de quelques problèmes fondamentauxandrew d. crockett (pages 375-86)

De nombreuses études sur le marché des euro-monnaies ont utilisé le cadre bien connu du multiplicateur de crédit, auquel on a traditionnellement recours pour analyser le système bancaire d’un pays. Un tel cadre suppose que le rapport entre les réserves du système et le bilan global de celui-ci est fixe et que la quantité de réserves est contrôlable, ou, tout au moins, prévisible. Alors que ces conditions sont valables dans le cas d’une économie fermée où le système bancaire est tenu de respecter des coefficients de réserves obligatoires fixés de manière exogène, il n’en va pas de même dans un système ouvert, tel que le marché des euro-monnaies, où l’obligation de constituer des réserves n’existe pas. De ce fait, toute tentative pour arriver à des multiplicateurs fixes doit aboutir à des résultats illusoires; il n’est donc pas étonnant que les multiplicateurs qui ont été estimés diffèrent grandement les uns des autres.

Comme les avoirs et les engagements en euro-monnaies sont des substituts étroits des instruments analogues du marché intérieur, le marché des euromonnaies doit être considéré dans le contexte de l’équilibre global de portefeuille, et son volume est influencé en dernière analyse par les mêmes instruments de politique monétaire que les autorités mettent en œuvre pour contrôler les agrégats monétaires de l’économie nationale. Le fait que le marché des euro-monnaies n’est pas soumis à des mesures spécifiques de contrôle ne signifie donc pas que son expansion a échappé ou échappera à l’action des instruments traditionnels du contrôle monétaire.

Note concernant l’utilisation des réserves sous différents régimes de taux de changeesther c. suss (pages 387-94)

Dans le système actuel de flottement dirigé, les autorités des pays ont le choix entre laisser les cours subir les effets des forces du marché et intervenir sur le marché. C’est un truisme, certes, de dire qu’en régime de taux de change librement déterminé par le marché, les réserves n’ont aucune raison d’être, mais on ne saurait inférer d’emblée qu’il y aura un fléchissement du recours aux réserves par suite d’une évolution vers un tel régime.

L’auteur examine et compare pour 14 pays industriels le recours aux réserves en période de parités relativement fixes et en période de flottement dirigé. Comme les statistiques connues n’offrent pas le moyen d’obtenir une définition systématique du recours aux réserves, l’auteur établit plusieurs méthodes permettant de mesurer l’ampleur de ce «recours.» Lorsque les différentes mesures débouchent sur des résultats inconciliables, cela dénote les difficultés de l’analyse; mais lorsqu’en majorité, elles mènent à des résultats convergents, on peut déduire de l’analyse certaines conclusions.

Les différentes mesures effectuées montrent que dans la période de flottement le recours aux réserves a diminué pour sept pays, augmenté pour trois pays et des résultats contradictoires ont été obtenus pour les quatre autres. Dans l’ensemble, la conclusion de l’analyse est que dans la période de flottement dirigé le recours aux réserves a baissé, en règle générale, mais il ne l’a pas fait dans une proportion considérable.

Intégration des secteurs budgétaire et monétaire dans les modèles économétriques: examen des questions théoriques et résultats empiriquesnurun n. choudhry (pages 395-440)

Il semble que les tenants de la théorie monétaire quantitative moderne, mieux connus sous le nom de monétaristes, aient apporté une contribution importante au débat actuel sur l’incidence des diverses mesures qui peuvent être prises dans les domaines budgétaire et monétaire. Tant dans leurstravaux théoriques qu’empiriques, les monétaristes ont remis en question le dogme keynésien fondamental selon lequel les modifications des dépenses publiques ont une influence sur l’emploi et le revenu. Ils soutiennent que les effets pervers exercés sur la richesse par le déficit budgétaire tendent à «évincer» les dépenses privées si le financement est assuré par des emprunts publics.

Le présent document constitue une étude brève mais critique des ouvrages actuels qui traitent de la controverse monétariste et examine plus particulièrement l’incidence des diverses méthodes de financement des déficits publics en incorporant une contrainte budgétaire. Cette contrainte prend en consideration la création monétaire et l’émission des obligations qui résultent des mesures de politique financière. L’incorporation de cette contrainte dans le modèle IS-LM agit simultanément sur les deux courbes IS et LM, ce qui rend bien compte des effets d’éviction possibles des mesures budgétaires.

Le document examine ensuite les méthodes qui ont permis à certains des modèles économétriques existants d’incorporer la contrainte du budget de l’Etat dans leur système IS-LM. Il indique que l’intégration des secteurs budgétaire et monétaire dans les modèles économétriques peut être menée à bien sans formuler explicitement cette contrainte, sous réserve que soient satisfaites certaines conditions garantissant l’existence de contrainte budgétaire implicite. Bien que la plupart des modèles économétriques étudiés ne spécifient pas explicitement qu’il y ait une limitation budgétaire, il semble que la majorité d’entre eux ait satisfait raisonnablement aux conditions de son existence implicite.

Enfin, le document examine la preuve de l’existence d’un effet d’éviction à l’aide de multiplicateurs dynamiques simules, associés à différentes mesures budgétaires et monétaires provenant des modèles économétriques mentionnés ci-dessus. Les résultats tendent à prouver que les mesures tant budgétaires que monétaires causent à long terme des effets d’éviction.

La sensibilité du rendement de l’impôt sur le revenu des personnes physiques aux Etats-Unis et les réformes fiscales de la dernière décennievito tanzi (pages 441-54)

L’élasticité automatique et la flexibilité de l’impôt sur le revenu des personnes physiques aux Etats-Unis (qu’on désigne ci-après par la sensibilité de l’impôt) par rapport aux variations du revenu national retiennent tout particulièrement l’attention des chercheurs et des responsables de la politique économique depuis des années. En raison des modifications fréquentes de la législation, il a toujours été difficile de mesurer directement cette sensibilité. Ceci explique que l’analyse des séries chronologiques, qui a été utilisée par plusieurs économistes, s’est toujours heurtée à des difficultés considérables et qu’elle a souvent manqué de fiabilité. Du fait de cette situation, de nombreux chercheurs se sont efforcés de mesurer cette sensibilité au moyen de la méthode de l’échantillonnage en coupe instantanée. L’auteur a utilisé cette méthode pour analyser des données relatives à l’impôt sur le revenu des personnes physiques enregistrées dans les différents Etats des Etats-Unis. Au moyen de cette méthode, qu’il a mise au point il y a quelques années, l’auteur estime l’incidence que les lois sur la réforme fiscale adoptées en 1964, 1968 et 1969 ont eue sur la sensibilité de l’impôt.

L’élasticité du produit de l’impôt par rapport au revenu imposable et l’élasticité du revenu imposable par rapport au revenu brut ajusté ont été calculées séparément. S’agissant de la première élasticité, l’étude montre que la modification la plus importante de cette “élasticité de la structure des taux” est postérieure à la loi de réforme fiscale de 1964. Il semble ne pas y avoir beaucoup de variations, au cours de la période examinée, de l’élasticité du revenu imposable par rapport au revenu brut ajusté. Le total de ces deux estimations des élasticités montre donc que l’élasticité globale de l’impôt par rapport au revenu brut ajusté s’est accrue légèrement entre 1963 et 1972. En ce qui concerne les flexibilités, il ne semble pas qu’elles aient été excessivement affectées par les diverses réformes fiscales; l’élasticité automatique de l’impôt par rapport au revenu brut ajusté était de 18 pour 100 environ pour 1972, soit le même chiffre que pour 1963. En conclusion, l’auteur compare le résultat qu’il vient d’obtenir avec ceux auxquels était arrivé Pechman en utilisant une méthode et des données différentes. Il en ressort que les résultats de la présente étude sont pratiquement identiques à ceux qu’avait obtenus Pechman.

Encouragements fiscaux pour l’épargne des ménageswilliam j. byrne (pages 455-89)

On accorde une haute priorité, tant dans les pays développés que dans les pays moins développés, à l’objectif consistant à accroître le taux de l’épargne intérieure. Cette étude passe en revue les résultats de différents types d’encouragements fiscaux des ménages à l’épargne. Ces encouragements se présentent, dans le système fiscal, sous la forme soit de déductions ou de crédits d’impôt applicables à l’acquisition des divers instruments d’épargne, soit d’exonérations du revenu de certains types d’actifs dans lesquels l’épargne est détenue. L’exonération qui est le plus souvent accordée porte sur le revenu des bons du secteur public, cette mesure visant à la fois à encourager l’achat d’effets publics et à réduire les taux d’intérêt dont ces titres sont assortis. Certains pays exonèrent d’autres types de revenu au titre des intérêts et des dividendes reçus, particulièrement l’intérêt sur les dépôts à terme et d’épargne. Les déductions sont accordées le plus souvent pour les contributions aux caisses de pension et de retraite et pour les primes d’assurance-vie, qui comportent des engagements contractuels et par conséquent se prêtent moins bien à des abus consistant à faire alterner épargne et désépargne. Le système du crédit d’impôt gagne en popularité parce qu’il est plus équitable pour les personnes se trouvant dans des tranches différentes de revenu imposable. En outre, certains pays accordent des primes d’épargne représentant un pourcentage du montant épargné et détenu sous une forme agréée. Diverses mesures ont été prises pour atténuer l’effet dégressif possible de ces diverses formules sur la répartition des revenus, sous forme particulièrement de plafonds sur le montant des déductions ou des exonérations ou sur le niveau de revenu au-dessous duquel on peut profiter de ces encouragements.

Ces encouragements fiscaux sont en vigueur dans un grand nombre de pays, en dépit de l’absence de conclusions théoriques ou empiriques fermes concernant leurs effets sur le niveau global de l’épargne. L’expérience menée dans trois pays—la République fédérale d’Allemagne, le Japon et la France—où ces encouragements fiscaux ont été largement utilisés est examinée en détail. Il est conclu que les encouragements fiscaux pour l’épargne des ménages peuvent être efficaces s’ils s’inscrivent dans le cadre d’une politique globale visant à accroître l’épargne des particuliers. Ceci, toutefois, peut être le résultat de la réduction de la progressivité effective du système fiscal provoquée par de tels encouragements. Par ailleurs, les tentatives faites pour canaliser l’épargne vers des emplois spécifiques ont été couronnées de succès.


Derechos especiales de giro: Nombre nuevo para el activo de creación recientejoseph gold (páginas 295-311)

La denominación “derecho especial de giro” (DEG) fue conferida al nuevo activo de reserva asignado por el Fondo, como un solución de compromiso con varios negociadores, principalmente franceses, quienes deseaban subrayar entonces que dicho activo tenía más carácter de crédito. La denominación se ha criticado como anodina e inexpresiva. El Comité de los Veinte propuso mejorar las características del DEG, para que se pudiera convertir en el activo principal de reserva del sistema, y una de las mejoras debería consistir en un nombre más acertado. En las reuniones de los Suplentes del Comité se propusieron nuevos nombres, y la prensa y el público ofrecieron muchas sugerencias después de haberse publicado el primer Bosquejo de la Reforma. Lo ocurrido recuerda la experiencia similar que precedió al establecimiento del Fondo, cuando, durante cierto tiempo, Lord Keynes propuso el término “bancor” y Harry Dexter White el de “unitas” para designar la nueva unidad monetaria del Fondo. En ambas ocasiones, se dedicó mucho ingenio a la búsqueda de un nuevo nombre. Desde luego, durante muchos siglos expertos monetarios han escrito acerca de un dinero universal cuyo nombre ellos habrían de elegir. En la próxima enmienda del Convenio Constitutivo del Fondo se mejorará el DEG y se ampliará su utilización, pero el nombre original ya está demasiado bien establecido para sustituirlo.

La estabilidad de los tipos de cambio y la flotación dirigida: La experiencia alemanajacques r. artus (páginas 312-33)

El presente estudio trata del vínculo entre los tipos de interés a corto plazo, los flujos de capital monetario privado y los tipos de cambio conforme a la flotación dirigida. Pone sobre el tapete la creencia de muchos economistas de que los flujos de capital tienen necesariamente efectos benignos que impiden que ocurran grandes movimientos irregulares de los tipos de cambio. También en él se analizan las probables repercusiones de las medidas de intervención de las autoridades monetarias centrales en el mercado cambiado y en el mercado interno de capital. Se ha elegido como caso para el estudio la experiencia de la República Federal de Alemania durante el período comprendido entre marzo de 1973 y julio de 1975.

El método que se sigue en el estudio es el de emplear un modelo de la balanza de pagos de la República Federal de Alemania en el que se incluye la demanda y oferta de dinero base, así como las funciones de reacción a la política que explican la demanda neta por el banco central de activos internos (política monetaria) y de activos sobre el exterior (política de íntervención). El núcleo del modelo consiste en ecuaciones que explican las corrientes de capital monetario privado y su interdependencia con el tipo de cambio. Las conclusiones en cuanto al funcionamiento del régimen de flotación se derivan de los cálculos obtenidos para ciertos parámetros, en particular los que determinan la forma en que los movimientos de los tipos de cambio son afectados por modificaciones de la política monetaria y por varias influencias externas.

La principal conclusión a que se ha llegado en el estudio es que la experiencia de la República Federal de Alemania con la flotación no respalda la fe que muchos economistas han tenido en la función estabilizadora de las corrientes de capital a corto plazo. Las variaciones relativamente pequeñas de las diferencias del tipo de interés entre Francfort y el mercado de eurodólares han tenido como consecuencia grandes fluctuaciones del tipo de cambio. Esto despierta graves dudas acerca de las repercusiones internacionales que puede tener el que un país industrial importante siga una política monetaria independiente conforme a un régimen de tipos flotantes.

El tipo de cambio como un instrumento de política en un país en desarrolloomotunde e.g. johnson (páginas 334-48)

Las modificaciones del tipo de cambio pueden usarse: a) como instrumento de ajuste monetario cuando hay una oferta excesiva de dinero; b) como medio de gravar (subsidiar) la acumulación de activos en el sector público; c) como instrumento para gravar a algunos productores del sector privado con un impuesto único y en una sola etapa sobre la riqueza y para conceder o otros un subsidio único y en una sola etapa, y d) como instrumento para conseguir desplazamientos a largo plazo de recursos de unos sectores a otros.

Para que una devaluación tenga efectos reales (aparte de los que se deben a la distribución de riqueza entre el gobierno y el sector privado), debe resultar en una disminución de la absorción real, con un ingreso real dado. En el marco monetarista, la disminución de la absorción real se produce por la disminución del valor real de los saldos monetarios. Se sostiene que, contrariamente a lo que indican algunos modelos monetarios recientes, las variaciones de precios relativos provocadas por la disminución de la absorción tienen efectos de riqueza en los países menos desarrollados con consecuencias a largo plazo a su vez en la estructura de estas economías. Esta tesis será válida incluso si no hay ilusión monetaria entre los trabajadores.

Los mercados cambiarios dobles y el apoyo exclusivo al tipo de cambio a plazowilliam h.l. day (páginas 349-74)

En este trabajo se comparan dos mecanismos de intervención oficial en el mercado cambiario que brindan un mercado de divisas estable y accesible a los cambistas, mientras aislan la oferta monetaria y las reservas, al crear entradas (salidas) de capital iguales al déficit (superávit) comercial. La primera política requiere establecer un mercado cambiario doble, prestandoapoyo oficial exclusivamente al mercado comercial, y ventas (compras) oficiales de moneda nacional resultantes de operaciones de apoyo en el mercado comercial, compensadas con compras (ventas) oficiales de moneda nacional en el mercado financiero libre. La segunda política supone el apoyo exclusivo al tipo de cambio a plazo en un mercado unitario, un tipo de cambio libre al contado y ventas (compras) oficiales a plazo de moneda nacional resultantes de operaciones de apoyo en el mercado a plazo, neutralizadas—a su vencimiento—con compras (ventas) oficiales de moneda nacional en el mercado libre al contado.

Los principales resultados del trabajo son los siguientes: 1) Los flujos de capital que se producen no tienen cobertura en el sistema de mercado doble, pero sí la tienen en el de mercado unitario. 2) En el sistema de mercado doble son mayores las variaciones del margen entre el tipo de cambio libre y el que goza de apoyo. 3) En el sistema de mercado doble, las variaciones del margen es probable que causen un efecto perjudicial tanto en los adelantos y atrasos como en la evasión; en el sistema de mercado unitario cabe que las modificaciones causen un efecto estabilizador en los adelantos y atrasos, siendo improbable que estimulen la especulación en el mercado a plazo. 4) Para disuadir de esta especulación del mercado a plazo en el sistema de mercado unitario se requerirán controles administrativos para vigilar sólo los contratos a plazo; el contener la evasión en el sistema de mercado doble obligará a controles administrativos más extensos que el vigilar los contratos tanto al contado como a plazo.

El sistema de mercado doble estriba en crear flujos de capital especulativo (es decir, sin cobertura) pero está amenazado de arbitraje ilegal entre los mercados libre o con apoyo. En contraste, el sistema de mercado unitario se funda en inducir flujos de capital de arbitraje con cobertura, pero con la amenza de especulación entre los mercados con apoyo y libre. Dado que los individuos son contrarios al riesgo, todo sistema que dependa de operaciones sin riesgo pero se halle amenazado de operaciones arriesgadas funcionará con más eficacia que un sistema dependiente de operaciones arriesgadas, pero amenazado de operaciones sin riesgo.

Análisis del mercado de euromonedas: Un intento de aclaración de algunas cuestiones básicasandrew d. crockett (páginas 375-86)

En muchos de los análisis acerca del mercado de euromonedas se ha utilizado el conocido marco multiplicador del crédito, que comúnmente se aplica en el enfoque de los sistemas bancarios internos. Este marco supone que la proporción entre los activos de reserva y el balance total del sistema es fija, y que la cantidad de los activos de reserva es controlable o, al menos, previsible. Si bien estas condiciones son razonablemente valederas tratándose de una economía cerrada en que el sistema bancario hállase sujeto a requisitos de reserva que se determinan exógenamente, no sucede lo mismo en un sistema abierto sin requisitos de reserva, tal como el mercado de euromonedas. Por consiguiente, es probable que todo intento para hallar multiplicadores fijos se traduzca en una mera ilusión, y no debe sorprender que se hayan hecho estimaciones de multiplicadores que difieren grandemente entre sí.

Dado que los activos y pasivos en euromonedas pueden sustituirse sin gran diferencia por instrumentos internos análogos, el mercado de euromonedas debe ser considerado dentro del contexto del equilibrio general de cartera, y en su magnitud influyen en definitiva los mismos instrumentos de política de que las autoridades se valen para controlar los agregados monetarios internos. La falta de controles específicos sobre el mercado de euro- monedas no significa, por tanto, que su expansión haya sido o sea inmune a los instrumentos tradicionales de control monetario.

Una nota sobre la utilización de las reservas con distintos sistemas de tipos de cambioesther c. suss (páginas 387-94)

Con el actual sistema de tipos de cambio de flotación dirigida, los países pueden elegir entre dejar que el tipo de cambio responda a las fuerzas de mercado y la intervención en el mercado. Aunque es tautológico que con un sistema libre de tipos de cambio flexibles no se necesitan reservas, no es posible a priori afirmar que el uso de reservas disminuirá de haber una tendencia hacia tipos de cambio más flexibles.

En este trabajo se examina el uso de reservas de 14 países industriales durante un período de tipos relativamente fijos, y se comparan esas cifras con las del uso de reservas durante un período de flotación dirigida. Como no hay una definición estandarizada de uso de reservas que pueda deducirse fácilmente de los datos publicados, se han calculado varias medidas del “uso” de reservas. La obtención de resultados contradictorios con las distintas medidas pondrá de manifiesto las dificultades del análisis del problema, en tanto que la obtención de resultados concordantes con la mayoría de las medidas permitirá establecer conclusiones con cierto grado de confianza.

Los resultados obtenidos con las diversas medidas indican que el uso de las reservas en el período de flotación disminuyó en 7 países y aumentó en otros 3; con respecto a los 4 países restantes, los resultados fueron ambivalentes. La conclusión general que se saca del análisis es que el uso de reservas ha disminuido en general durante el período de flotación dirigida, pero no mucho.

Integración de los sectores monetario y fiscal en modelos econométricos: Un estudio sobre aspectos teóricos y resultados empíricosnurun n. choudhry (páginas 395-440)

Los defensores de la teoría monetaria cuantitativa moderna, más conocidos como monetaristas, parecen haber contribuido con aportaciones considerables al actual debate acerca de los efectos de medidas alternativas de política fiscal y monetaria. Los trabajos teóricos y empíricos de los monetaristas han puesto en tela de juicio el fundamento keynesiano de que las variaciones del gasto del sector público afectan el nivel de empleo e ingreso. Los monetaristas aducen que ciertos efectos perversos causados en la riqueza por el gasto deficitario del sector público “desplazan” al gasto privado, si se financian con préstamos públicos.

En este trabajo se analiza con brevedad y criticamente las publicaciones actuales sobre la controversia monetarista y se centra la atención en el efecto de los distintos métodos de financiar los déficit del sector público incluyendo una restricción presupuestaria gubernamental que justifique la in- jección de nuevo dinero y bonos en la economía, a causa de medidas de política fiscal. La inclusión de semejante restricción en el esquema Ahorro- Inversión (AI) afecta tanto a la función AI como a la Liquidez-Dinero (LM) simultáneamente y, con ello, incorpora debidamente los efectos de desplazamiento, si los hubiere, causados por las medidas fiscales.

Luego, se dirige la atención a la forma en que algunos de los actuales modelos econométricos han incluido la restricción presupuestaria del sector público en sus sistemas inversión-ahorro y liquidez-dinero. En el trabajo se sostiene que la inclusión de sectores fiscales y monetarios en los modelos econométricos puede efectuarse sin especificar explícitamente dicha limitación, con tal que se cumplan ciertas condiciones para asegurar la existencia de una limitación implícita del presupuesto del sector público. Si bien la mayoría de los modelos econométricos estudiados no especifica explícitamente la limitación presupuestaria del gobierno, la mayoría de los mismos parecen haber cumplido razonablemente bien las condiciones de su existencia implícita.

Por último, el trabajo analiza las pruebas de los efectos de desplazamiento, partiendo de multiplicadores dinámicos simulados en conjunción con medidas fiscales y monetarias alternativas, que se deducen de los modelos econométricos antes mencionados. Las pruebas indican que las medidas de política fiscal y monetaria conducen a los efectos de desplazamiento a largo plazo.

El grado de sensibilidad del producto del impuesto sobre la renta personal en Estados Unidos y las reformas tributarias del último deceniovito tanzi (páginas 441-54)

La elasticidad y la flexibilidad incorporada del impuesto sobre la renta personal en Estados Unidos con respecto a la variación del ingreso nacional (conocidas como la sensibilidad del impuesto) han sido por mucho tiempo de interés particular para los investigadores y las autoridades a cargo de la formulación de política. La medición directa de esta sensibilidad ha resultado siempre difícil debido a frecuentes modificaciones estatutarias. Por esta razón, el método de series cronológicas, aunque aplicado por varios economistas, ha tropezado siempre con considerables dificultades y a menudo no se ha podido depender mucho de él. En consecuencia, muchos investigadores han tratado de medir esta sensibilidad usando datos de sección cruzada. En el presente trabajo se usa el método de sección cruzada basado en datos del impuesto sobre la renta personal presentados, por cada estado de los Estados Unidos. Mediante el uso de este método, formulado hace varios años por el autor, se calcula en este trabajo el impacto que las leyes de reforma tributaria de 1964, 1968 y 1969 han tenido en esta sensibilidad.

Por separado se calcula la elasticidad del ingreso tributario con respecto a la renta imponible y la elasticidad de la renta imponible con respecto a la renta bruta ajustada. En cuanto a la primera de estas elasticidades, se demuestra que la variación más importante en esta “elasticidad de la estructura de tasas” ocurre después de promulgada la ley de reforma tributaria de 1964. Durante el período no parece haber variado mucho la elasticidad de la renta imponible con respecto a la renta bruta ajustada. Por tanto, la combinación de estas dos estimaciones de elasticidades da una elasticidad global del impuesto con respecto a la renta bruta ajustada que aumenta algo entre 1963 y 1972. En lo que concierne a las flexibilidades, no parece que éstas hayan sido muy afectadas por las distintas reformas tributarias; en 1972, la flexibilidad incorporada del impuesto con respecto a la renta bruta ajustada fue aproximadamente del 18 por ciento, o igual que en 1973. El autor concluye el estudio comparando el resultado así logrado con los conseguidos por Pechman, que usa un método diferente y distintos datos. Queda demostrado que los resultados obtenidos en el actual trabajo son prácticamente idénticos a los de Pechman.

Incentivos fiscales para el ahorro de las unidades familiareswilliam j. byrne (páginas 455-89)

Tanto en los países desarrollados como en desarrollo se da alta prioridad al aumento de la tasa de ahorro interno. En este trabajo se consideran experiencias con diversos tipos de incentivos fiscales para el ahorro de las unidades familiares. Estos incentivos se introducen en el sistema tributario como deducciones o créditos por suscribirse a diversas clases de instrumentos de ahorro o como exenciones por el rédito de ciertas clases de activos en que se mantienen ahorros. La exención común se acuerda por el rédito de bonos del sector público, tanto para alentar la compra de instrumentos de deuda pública, como para reducir su costo de intereses. Ciertos países eximen otras clases de ingreso en intereses y dividendos, especialmente el interés de los depósitos a plazo y de ahorro. Las deducciones se acuerdan casi siempre por aportes a fondos de jubilación y de pensiones y por primas de seguro de vida que como entrañan obligaciones contractuales se prestan menos al abuso de alternar ahorro y desahorro. Los créditos están cobrando mayor popularidad porque son más equitativos entre personas con diferentes niveles de ingreso imponible. Además, ciertos países conceden bonificaciones o primas de ahorro como porcentajes de las cantidades que se ahorran y mantienen en formas aprobadas. Se han adoptado diversas medidas para mitigar el efecto posiblemente regresivo de estos planes en la distribución del ingreso, especialmente topes sobre el monto de las deducciones o exenciones o el nivel de ingreso por debajo del cual pueden utilizarse estos incentivos.

A pesar de que no hay conclusiones teóricas o empíricas firmes sobre su efecto en el nivel agregado del ahorro, estos incentivos están en vigor en muchos países. En el trabajo se examina más detalladamente la experiencia de tres países—la República Federal de Alemania, Japón y Francia—que los han usado mucho y se llega a la conclusión de que los incentivos fiscales para el ahorro de las unidades familiares pueden ser eficaces como parte de una política general para aumentar el ahorro personal. Este aumento, sin embargo, puede deberse a la reducción de la progresividad efectiva del sistema tributario causada por esos incentivos. También se han obtenido buenos resultados encauzando el ahorro hacia usos específicos.

In statistical matter (except in the résumés and resúmenes) throughout this issue,

Dots (…) indicate that data are not available;

A dash (—) indicates that the figure is zero or less than half the final digit shown, or that the item does not exist;

A singe dot (.) indicates decimals;

A comma (,) separates thousands and millions;

“Billion” means a thousand million;

A short dash (–) is used between years or months (e.g., 1971-74 or January-October) to indicate a total of the years or months inclusive of the beginning and ending years or months;

A stroke (/) is used between years (e.g., 1973/74) to indicate a fiscal year or a crop year;

Components of tables may not add to totals shown because of rounding.

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Mr. Byrne, economist in the Tax Policy Division of the Fiscal Affairs Department, is a graduate of Oxford University and of the London School of Economics and Political Science.

In addition to colleagues in the Fund, the author is grateful to Roswitha Diehl for her assistance in preparing this paper.


See, for example, W. Arthur Lewis, “Capital,” Ch. V in The Theory of Economic Growth (London, 1955), pp. 201-303.


Stanley S. Surrey, Pathways to Tax Reform: The Concept of Tax Expenditures (Harvard University Press, 1973). A tax expenditure may be defined as a governmental financial assistance program carried out through special tax provisions rather than through direct government expenditures (ibid., p. 6).


As such, it will almost certainly be unsuccessful. (See exemptions, in Section II.)


Richard A. Musgrave and Malcolm Gillis, Fiscal Reform for Colombia: Final Report and Staff Papers of the Colombian Commision on Tax Reform, ed. by Malcolm Gillis (Cambridge, Massachusetts, 1971).


See David J. Ott and Attiat F. Ott, “The Tax Subsidy Through Exemption of State and Local Bond Interest,” in The Economics of Federal Subsidy Programs, Part 3, Tax Subsidies, U. S. Congress, Compendium of papers submitted to the Joint Economic Committee, July 15, 1972 (92nd Congress, 2nd Session, Washington, 1972), pp. 305-16.


Ott and Ott, op. cit., p. 305.


See A. R. Prest, “Government Revenue, the National Income, and All That,” Ch. 8 in Modem Fiscal Issues: Essays in Honor of Carl S. Shoup, ed. by Richard M. Bird and John G. Head (University of Toronto Press, 1972), pp. 137-63.


See Leif Mutén and Karl Faxén, “Sweden,” Foreign Tax Policies and Economic Growth: A Conference Report of the National Bureau of Economic Research and the Brookings Institution—hereinafter referred to as Foreign Tax Policies and Economic Growth (New York, 1966), pp. 337-89, especially pp. 369-70.


“The term National Savings embraces those facilities provided by the State or which are under strict State supervision and control and which are designed for, though not confined solely to, the small or unsophisticated saver,” Committee to Review National Savings, Report (Cmnd. 5273, London, 1973), p. 1.


Ibid., pp. 180-81.


See G. L. S. Shackle, “Recent Theories Concerning the Nature and Role of Interest,” Ch. Ill in Surveys of Economic Theory: Money, Interest, and Welfare (London, 1965), Vol. 1, pp. 108-53, especially p. 151. Also, Irving Fisher, The Theory of Interest (New York, 1930), pp. 286-87; James M. Henderson and Richard E. Quandt, Microeconomic Theory: A Mathematical Approach (New York, Second Edition, 1971), pp.307–309; Joseph W. Conard, An Introduction to the Theroy of Interest (University of California Press, 1959), pp.58–63.


Colin Wright, “Saving and the Rate of Interest,” in The Taxation of Income from Capital, ed. by Arnold C. Harberger and Martin J. Bailey (The Brookings Institution, Washington, 1969), pp. 275-300.


Warren E. Weber, “The Effect of Interest Rates on Aggregate Consumption,” American Economic Review, Vol. 60 (September 1970), pp. 591-600.


Raymond F. Mikesell and James E. Zinser, “The Nature of the Savings Function in Developing Countries: A Survey of the Theoretical and Empirical Literature,” Journal of Economic Literature, Vol. 11 (March 1973), p. 19.


The effect of the higher real rate of interest in reducing capital investment is presumably offset by the stimulating effect of more settled monetary conditions, so that total investment and income rise.


Deutsche Bundesbank, Monthly Report, Vol. 26 (May 1974), p. 14.


W. Krelle and G. Grisse, The Bonn Model of the German Economy, Version 8, Universitat Bonn, Institut für Gesellschafts- und Wirtschafts-wissenschaften.


Deutsche Bundesbank, Okonometricsches Modell, Version 05/02/75 (Frankfurt am Main, February 1975).


Deutsche Bundesbank, Monthly Report, Vol. 26 (May 1974), p. 14.


Economic Planning Agency, “The E.P.A. Pilot Model,” Economic Analysis (Tokyo), No. 52 (December 1974), and Study of the Master Model for Short-Term Economic Forecasting, Research Paper No. 21; Bank of Japan, “A Monthly Model of the Japanese Economy,” Monthly Research Bulletin. (These references are all in Japanese.)


Shirley Almon, “The Distributed Lag Between Capital Appropriations and Expenditures,” Econometrica, Vol. 33 (January 1965), pp. 178-96.


Unless otherwise indicated, all figures in this section are derived from Ministère de l’Economie et des Finances, Statistiques et Etudes Financières (sèrie bleu), No. 311 (November 1974), pp. 56-75.


Author’s estimate, assuming an average marginal tax rate of 40 per cent among beneficiaries, higher than those used in calculating revenue losses under (2), (3), and (4), as beneficiaries are assumed to be in the higher-income brackets.


Author’s estimate, assuming an average marginal tax rate of 30 per cent for recipients of such interest.


See footnote 23.


Author’s estimate, assuming an average marginal tax rate of 25 per cent.


Total property income of households in France in 1970 was F 55 billion.


See Ministère de l’Economie et des Finances, “Le modèle de l’impôt sur le revenu,” Statistiques et Etudes Financières (série orange), No. 3 (1971), p. 37.


Michael K. Evans, An Econometric Model of the French Economy: A Short-Term Forecasting Model, Organization for Economic Cooperation and Development (Paris, March 1969).


Ministère de l’Economie et des Finances, “Demande et de comportement d’autofinancement,” Statistiques et Etudes Financières (série orange), No. 1 (1971).


Ministère de l’Economie et des Finances, “Le modèle Star,” Statistiques et Etudes Financières (trimestriel), No. 15 (1974).


M. Aglietta, R. Courbis, and C. Seibel, “Le modèle FIFI,” Les Collections de l’INSEE, Vol. 22 (Paris, June 1973).


See Vito Tanzi, The Individual Income Tax and Economic Growth—An International Comparison: France, Germany, Italy, Japan, United Kingdom, United States (Baltimore, 1969).