The Italian national saving rate has been recently experiencing a substantial decline. In the second half of the eighties, the net private saving rate has been fluctuating around 14 percent in terms of net national disposable income, 5 percentage points down from the average saving rate prevailing in the sixties. This paper suggests that net government transfers, which are at the root of the present government deficits, have substantially contributed to this decline. Changes in social security laws and regulations which took place in the late sixties and early seventies severely weakened the link between contributions and benefits permitting a time path of aggregate consumption in excess of what would have occurred in the absence of such changes. The paper estimates at about 2 to 3 percentage points the reduction in the saving rate caused by such changes in social security laws and regulations. Finally, the paper suggests that recent actions to reform the Italian pension system could be unable to reverse the present trend in the private saving rate, while raising the national rate through a significant reduction of current social security imbalances.
This paper - presented at the Workshop on "Saving in Italy: Past and Future Trends, Household and Government Behaviour", held in Rome on 16-17 January 1992 - is part of a research project undertaken at the Bank of Italy. The Italian versions of all the contributions will be published in a special issue of "Contributi all'analisi economica".
