Timeline for Why the GDP does not decrease even when we are saving from our income?
Current License: CC BY-SA 3.0
6 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Dec 22, 2016 at 5:25 | vote | accept | saurav1405 | ||
| Dec 21, 2016 at 18:23 | comment | added | Alecos Papadopoulos | @saurav1405 Your comment explicitly introduces an intertemporal aspect which was totally absent from your question. For the new and different question (for which you should open a new thread here and not edit this one), whether savings today will reduce GDP tomorrow, I refer you to the standard (and empirically verified) growth theory. | |
| Dec 21, 2016 at 16:56 | comment | added | saurav1405 | GDP of the next year should decrease if people save money this year because demand will be less than supply and the extra goods will be stored as inventories hence the firms will produce less next year thus less GDP | |
| Dec 21, 2016 at 15:04 | comment | added | Alecos Papadopoulos | In the specific archetypal abstract model, savings equal investment by construction. But even if one wanted to consider "hoarding" (i.e. savings that are kept interest-free), it would not alter the fact that GDP creation comes first, allocation decisions after. | |
| Dec 21, 2016 at 15:02 | comment | added | saurav1405 | How is I = S in the above equation ? If we cancel out C(consumption) on both sides. | |
| Dec 21, 2016 at 14:58 | history | answered | Alecos Papadopoulos | CC BY-SA 3.0 |