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Questions tagged [saving]

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1answer
15 views

falling household savings

While reading Mazzucato's "The value of everything", I come across this The rise in private debt in the US and UK has resulted in household savings falling as a percentage of disposable income - ...
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1answer
11 views

Determine equation for the IS curve [on hold]

An economy has​ full-employment output of 1,000. Desired consumption and desired investment​ are: C ​= 250 ​+ 0.90​(Y-T​) - 500r I ​= 200 - 600r. Government purchases and taxes are given to​ be: G​...
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1answer
8 views

GDP Calculation and treatment of Personal Savings

While calculating GDP of nation, how personal savings which is not invested in economy or has become part mandatory reserve ratio of government is treated? Similarly do we include import and export of ...
4
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0answers
62 views

How Africans use their wages?

I was researching poverty in Africa and was reading about their daily wages. Based on the article linked, 2/3 of Africans live on less than $1.25 USD, a day. However, what this article and many ...
4
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1answer
48 views

Does savings lead to investment in physical capital?

In the introductory macroecon textbook I'm reading, it's made clear that savings=investment. Mathematically, this makes sense to me. However, I'm having trouble understanding the qualitative ...
2
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1answer
170 views

Intuition Behind the Definition of Prudence?

I'm having trouble seeing why an agent is said to exhibit "prudence" when u'''($\cdot$) > 0. How does having a utility function with a strictly positive third derivative make an agent act "prudently"? ...
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0answers
3k views

What's the difference between the Life Cycle Hypothesis and Permanent Income Hypothesis?

Would it be correct to say that the Permanent Income Hypothesis (PIH) stipulates that current consumption decisions are made based on future income projections/expectations, while the Life Cycle ...
1
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0answers
62 views

Monthly savings plans

Monthly savings plans in stocks or funds are typical investments for many people. On aggregate, these plans generate a large demand on the underlying assets, often around the end/beginning of a month. ...
1
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1answer
37 views

Change in optimal savings due to increased risk

Currently I am working out advanced micro problems that deal with household's optimal savings behavior. Although I think I understand the material quite well, I am not sure about the specific detail ...
3
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2answers
311 views

What is the actual paradox in the Paradox of Thrift?

I understand most of the reasoning, but don't understand what the actual paradox here is, as I believe there can be up to three potential paradoxes: individuals increase savings when they should be ...
0
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1answer
30 views

Is lowered probability of spending equals savings? [closed]

This a really basic one and logic says: Yes given enough iterations. But I am looking for validation Situation: There is a 7% probability of expenses of 1000 occurring. I have a tool that then ...
0
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1answer
51 views

Why the GDP does not decrease even when we are saving from our income?

When we are saving from our income then we don't consume as mush as we earn. So the GDP should decrease as well as the income but this does not happen. Why?
1
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1answer
97 views

Is investment a type of saving or expenditure

I am confused that if investment is a type of saving or a expenditure .if investment is a type of expenditure then is saving is what is left after subtracting consumption and investment from income
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0answers
58 views

Locating Sweden's Net Savings Rate, Public Saving, Private Saving, and Corporate Savings Rates?

I'm looking at the savings rates for Sweden and would first like to better understand the breakdown between Gross National Savings, and Net Savings? I've looked around and still haven't found an ...
3
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3answers
98 views

Is there an economic theory of why people like to hold on to wealth?

It seems to me that many people work to become wealthy, but not because they want to consume all that wealth. Many people give it away, other's don't, but still they do not spend it. You hear about ...
6
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2answers
167 views

Can savings and poverty coexist?

Many governments try to decrease savings in the economy so that recessions do not occur. Does it make sense for savings and poverty to coexist though at significant scales? Let's say a population was ...
5
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1answer
316 views

Does dollar cost averaging actually have any advantage over one time investment?

Some banks promote savings plans by stating that investing a fixed amount of money in regular time intervals minimizes the average buying price or the downside risk (dollar cost averaging). Since the ...
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0answers
34 views

How does Global Saving Glut flood the market with cash?

When I was browsing the internet last night, I read a couple articles on the Global Saving Glut. And many has ascribed it to be a cause of US financial crsis. My question is how so? The articles argue ...
3
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3answers
54 views

Diagram with axes $r$ and $S,I$

In the figure below, I have a coordinate system where $r$ depends on $I$ or $S$, but I do not completely understand why I can have multiple functions inside this coordinate system. Why can I write $S(...
6
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4answers
7k views

Why does savings equal investment (scenario)?

Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a 500 dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the 500 dollars and ...
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0answers
43 views

High interest rates=High savings?

My intuition tells me that an increase in interest rates will make saving more attractive and should encourage saving. But if that is the case, why the MPS( marginal propensity of saving )doesn't ...
1
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2answers
72 views

What's the actual relationship between deflation, spending and saving?

I am pretty confused with this concept. Since deflation is a result of decreasing prices, it means that the demand for goods and services rise therefore stimulating more spending. But on the other ...
4
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3answers
1k views

Relationship between Real Interest Rate and Employment

The country of Kingsland is considering the introduction of a compulsory retirement saving scheme. Under this scheme all workers are required to save ten per cent of their annual wages and ...
2
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0answers
192 views

Optimizing Cobb-Douglas like functions

Economics isn't my home field, but I'm looking for references for a paper I'm working on and I'm hoping one of you can help. Are there many good references for optimizing a Cobb-Douglas like utility ...
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1answer
118 views

Savings and investment relation to interest rate, loanable funds theory, paradox of thrift [closed]

HOw can it all be linked? I think I know but I am only a fresher so.
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0answers
40 views

Keynesian consumption law not applicable in USA ?

I was looking at some numbers and saw that in USA in 2010 consumption was at 70% but savings were close to zero and that even places were there is high income savings are still low while the keynesian ...
3
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1answer
337 views

Financial investment in the composition of GDP

In the production function Y = C + I + G + NX Does foreign investment in domestic assets (i.e. foreign buying of domestic bonds) - and vice versa - come under the Net Exports variable? Which ...
3
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2answers
3k views

Investment = Saving relation in an open economy

I am reading the book Macroeconomics by Olivier Blanchard. It states that an alternative way of looking at an goods market equilibrium is investment = saving. In an open economy it states the ...
3
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1answer
105 views

What is the effect of redirecting government tax intake to a consumer retirement saving incentive?

In New Zealand we have a retirement saving scheme called Kiwisaver. The scheme is opt in. If a consumer opts in, they must save at least 3% of their income, which they can't access until retirement. ...