Both factors resulted in the savings ratio cushioning discontinuities in the income trend at least for some period of time and thus helped in a certain sense to smooth consumption over time. The fact that the previous savings pattern gave way to a continuous downward trend from the early 1990s initially reflected a return to normal from the high level reached in 1990.
At that time, the 198690 tax reform had considerably expanded households’ scope of action in the old Länder. Thereafter, both cyclical and structural factors led to a lower propensity to save. In the period from 1992–1998 real disposable income per capita grew at an average of ¾% and hence less strongly than real consumption (+1%).