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Understanding the Impact of Savings on Growth: A Case Study of Yemen’s Economic Challenges

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  • Hassan, Ramzi Abdullah Ahmed

Abstract

This paper examines the impact of savings on economic growth, a critical topic in economic theory with differing views from classical and Keynesian perspectives. Classical economic theory posits that savings drive economic growth by providing funds for investment, while Keynesian theory argues that savings can reduce aggregate demand and slow growth. The study also looks at factors that influence saves behavior, such as income, interest rates, and cultural views, as well as different types of savings, such as personal, corporate, and government savings. The findings show that savings are critical to long-term economic growth because they fuel investments and stabilize economies during downturns. However, the relationship between saves and growth is complicated, as excessive savings can stifle growth if not properly channeled toward productive investment. The study suggests that savings' function in economic development significantly depends on how they are used and handled within an economy. Future research should focus on the importance of saves in various economic settings, as well as the efficacy of policies aimed at increasing the influence of savings on growth.

Suggested Citation

  • Hassan, Ramzi Abdullah Ahmed, 2024. "Understanding the Impact of Savings on Growth: A Case Study of Yemen’s Economic Challenges," MPRA Paper 124860, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:124860
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    File URL: https://mpra.ub.uni-muenchen.de/124860/1/MPRA_paper_124860.pdf
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    References listed on IDEAS

    as
    1. Gersovitz, Mark, 1988. "Saving and development," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 10, pages 381-424, Elsevier.
    2. Chen, Peter & Karabarbounis, Loukas & Neiman, Brent, 2017. "The global rise of corporate saving," Journal of Monetary Economics, Elsevier, vol. 89(C), pages 1-19.
    3. Pascaline Dupas & Jonathan Robinson, 2013. "Why Don't the Poor Save More? Evidence from Health Savings Experiments," American Economic Review, American Economic Association, vol. 103(4), pages 1138-1171, June.
    4. Chen, Shimin & Cronqvist, Henrik & Ni, Serene & Zhang, Frank, 2017. "Languages and corporate savings behavior," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 320-341.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Savings; Economic Growth; Capital Formation; Investment; Keynesian Economics; Classical Economics.;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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