Saving

Saving is the replacement currently free funds for future use. Frequently, an amount is added up by repeated reserve over time, which can then be used for a major purchase.

Forms of savings

→ Main article: investment

• Purpose of saving: save to allow larger purchases later. ( Car, vacation)
• Precautionary saving: save to protect themselves against emergencies. (Illness, unemployment)

A precise definition is not always possible. For example, saving for the purchase of property are viewed as an end or as a savings retirement savings.

Under the theme " precautionary savings " can hedge against uncertainty, holding a one-off achievement levels of consumption and the flexibility of the intertemporal consumption (ie liquidity ) lane. Secure liquidity through savings, ie through reduced consumption and cost reduction usually results in people not indebted to new reserves, but only to avoid borrowing. Such savings are often described as saving, but not in the sense as in the following text, ie with winning fathering investment options for their savings, but rather in the sense of fiscal consolidation.

Saving should not be confused with the hoarding, in which money in the piggy bank, is retained under the mattress, etc., without applying it. Save other hand, is usually remunerated with an interest and remains in the economic cycle, while the hoarding will not be reimbursed and the economic cycle withdraws money.

There are different types of investments. Examples of paper asset investments: savings account, savings bonds, term deposits, Federal Treasury letter, building society, daily allowance. Basically paper based value systems on a legally established promise to pay. Other hand, tangible assets represent a real estate

Examples of tangible assets: real estate, precious metals, stocks, ships, aircraft

Political Save

A policy to reduce the budget deficit is often euphemistically called save in politics, called austerity or austerity. The budget remains in deficit and that the government reduces its spending (so-called save ), but nevertheless continues to build on its debt. So the policy brakes, only the amount of government debt.

National saving

Macroeconomic savings

Under the national or societal costs, usually abbreviated to, is understood in macroeconomics, the total income of an economy, the spending on consumption and government consumption were withdrawn shortly.

The aggregate savings can be in the private and public saving disassemble: where T = taxes - transfers ( eg social assistance)

• Under private savings is defined as the total income of an economy, the taxes and consumption have been deducted. Private saving has confidence and trust a strong socio - psychological component that can express economic relevance in reduced consumption and anxiety Save yourself thoroughly.
• Under public saving refers to the tax revenues of an economy where government consumption were subtracted.
• Private savings Private saving is the part of disposable income that is not for consumption is available, but is put back. This disposable income is national income minus net taxes. Thus, the private savings result from
• Public savings The state (public ) saving is defined, however, from the difference between government revenues over government expenditures. The net tax state revenues and consumption of public budgets form the government spending. Thus applies to the state saving

From the sum of private and public savings is then obtained aggregate saving / national savings. This is in accordance with applicable literature as described. In order to show a direct relationship between the national savings on the one hand and the private and government saving on the other hand, the relationship is represented mathematically below.

Relationship between savings and investment

In a closed economy is the relationship between national saving and investment is a direct link. This follows from the definition of the total accounts demand function:

After conversion of the demand function is obtained:

Substituting these with the national savings equal, then this results in:

In other contexts will be discussed given at this point and refer to the Articles of the goods market equilibrium.

Considering now an open economy, so in addition to the connection already in force nor the foreign trade of an economy must be considered. It follows then. Here, due to the significant difference between open and closed economies. While closed housekeepers people can only increase by saving their capital stock, can be increased in an open economy through the purchase of foreign assets plus its own capital stock, thereby saving the investment opportunities to be used earlier. Thus, one can increase domestic investment by borrowing abroad, without changing the savings.

National Accounts

The aggregate savings (in the open economy ) are equal to domestic investment plus net foreign investment,

• (NFI always equal to net exports ).

In the theoretical closed economy, thus: S = I

In the national accounts (SNA ) " Save " in the use of income account ( expenditure approach ) is defined as

• Disposable income ( expenditure approach )
• Plus households in pension funds - this size appears in the households sector and private non-profit
• Less households in pension funds - this size macroeconomic netted to zero - this size appears in the corporate sector.
• Minus consumption ( expenditure approach ) - including financial services ( Financial Intermediation Services Indirectly Measured (FISIM ) )

Macroeconomic importance of saving

Save or to change the saving behavior has more impact on the economy that are controversial among the various theories of growth. In the neoclassical model, an increase in savings leads to lower market interest rates and thus to an increase in investment. The optimal savings is given by the so-called rate of time preference. In Keynesian economics, however, occurs emerge with the increased saving demand shortfall in the foreground: a result, the profits would fall from the investments already made and therefore less internal company sources of finance (equity ) are available support (which also happen to reduce the willingness of banks to lend ). Moreover, it was unlikely that companies would make or expansion investments with falling demand.