Deregulation and Consumption: Saving Dynamics in the Nordic Countries

Changes in saving behavior brought about by financial liberalization in the Nordic countries are examined. Although this paper suggests that there have been changes in the economic relationships in Denmark and Finland, the evidence from Norway is less conclusive, and the data do not reveal any structural change in Sweden. The results also indicate that the wealth effect has played an increasing role in household saving decisions. Since the present tax rules are biased against saving, cuts in marginal tax rates and reductions in the tax value of interest payments would be expected to increase household saving.