The question of whether higher-lifetime income households save a larger fraction of their income was the subject of much debate in the 1950s and 1960s, and while the answer was not resolved, it remains central to the evaluation of tax and macroeconomic policies. We resolve this long-standing...

The issue of whether higher lifetime income households save a larger fraction of their income is an important factor in the evaluation of tax and macroeconomic policy. Despite an outpouring of research on this topic in the 1950s and 1960s, the question remains unresolved and has since received...