Tax policy impacts savings and interest rates, shaping intergenerational wealth transfers.
The article explores how tax policies and intergenerational transfers impact savings and interest rates. They found that when borrowing rates are higher than lending rates, the tax treatment of interest payments significantly affects capital's productivity, while other factors like government spending and debt do not have as strong an impact. Intergenerational transfers are shown to be driven by altruism, with most transfers happening early in the recipient's life.