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This paper highlights a number of determinants of US household saving in order to cast light on potential steps the government can employ to promote savings, especially as the population ages.  It builds on the earlier work of Cohn and Kolluri (2003) on the determinants of saving for the former G-7 countries of Canada, France, Germany, Italy, UK and the US (which are now part of the G-8 group) - all of which face the potential financial problems arising from rapidly aging populations.  The paper uses quarterly data for the period 1960-2016, to investigate the effects of the independent variables that are most susceptible to government policy: interest rates, government surplus or deficits, social security contributions, personal debt and household wealth on personal saving in the US.  As the data involved are time series observations, we apply cointegration and error correction techniques to distinguish between short-run and long-run equilibrium relationships, and present the results.  Particular attention is paid to the effects of interest rates, social security contributions, government surplus, personal debt and household wealth through the derivation of the long-run elasticity estimates.  Based on the empirical results obtained, the paper prescribes appropriate public policy recommendations.  One way in which government policy may improve the stock of capital is through incentives for household saving.  But any such attempt should consider the potential feedback effects to and from the real rate of interest and other independent variables under consideration.

Household saving, household debt, household wealth, interest rates, inflation, government surplus, social security, elasticities.