Saving does not equal investment
AbstractSAVING DOES NOT EQUAL INVESTMENT John Maynard Keynes confused economists and politicians all over the world when he wrote, “Saving is necessary to equal investment” together with a few equations to confirm his idea and finally concluding that S = I. There have been repeated discussions about how saving can equal investment, accidentally or with certainty. We may think that Keynes explained about how saving money is used in the same amount either to invest by savers or by borrowers. But this is not what he meant. Keynes merely wrote that saving is residual. Residual from what? This paper shows that S always equals I in a closed economy. But even as S equals I, saving does not equal investment. Because I is investment but S is not saving.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0510014.
Length: 2 pages
Date of creation: 16 Oct 2005
Date of revision:
Note: Type of Document - doc; pages: 2
Contact details of provider:
Web page: http://188.8.131.52
Keynes; saving; investment; S does not equal I; Confusion about saving;
Find related papers by JEL classification:
- E - Macroeconomics and Monetary Economics
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.