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Investment and savings in a dynamic context

Author

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  • Claudio Sardoni

    (Department of Economics and Social Sciences, Sapienza University of Rome (IT).)

Abstract

In the 1980s Asimakopulos in dealing with the problems of finance, liquidity, investment and saving, criticized both Kalecki and Keynes for the way they dealt with the problem of the investment multiplier. Kalecki's and Keynes's insufficient attention to the time dimension of the multiplier process led them to underestimate the importance of financing investment projects, especially with regard to the problem of the conversion of the firms' short-term loans into long- term loans. When this issue is taken into due consideration, it appears that the economy's propensity to save plays some role in the determination of the conditions under which firms can carry out their investment plans. The paper concentrates on the main point made by Asimakopulos. In a dy- namical analytical context which takes explicit account of the time dimension of processes, the economy's propensity to save can a ect investment, even though this does not imply the rejection of the view that investment `comes first'. A dynamic approach has the merit to emphasize the important role that the financial system plays in the process of economic expansion and it allows to look at expansionary policies and their e ects in a more articulate and thorough way.

Suggested Citation

  • Claudio Sardoni, 2019. "Investment and savings in a dynamic context," Working Papers 1/19, Sapienza University of Rome, DISS.
    • Handle: RePEc:saq:wpaper:1/19
    as

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    File URL: http://www.diss.uniroma1.it/sites/default/files/allegati/DiSSE_Sardoni_wp1_2019.pdf
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    References listed on IDEAS

    as
    1. Terzi, Andrea, 1986. "Finance, Investment and Saving: A Comment," Cambridge Journal of Economics, Oxford University Press, vol. 10(1), pages 77-80, March.
    2. Bruna Ingrao & Claudio Sardoni, 2019. "Banks and Finance in Modern Macroeconomics," Books, Edward Elgar Publishing, number 17355.
    3. C. Sardoni, 2016. "A note on the sustainability of full employment in the presence of budget deficits," Review of Political Economy, Taylor & Francis Journals, vol. 28(1), pages 79-89, January.
    4. Richardson, David R, 1986. "Asimakopulos on Kalecki and Keynes on Finance, Investment and Saving," Cambridge Journal of Economics, Oxford University Press, vol. 10(2), pages 191-198, June.
    5. J. A. Kregel, 1984. "Constraints on the Expansion of Output and Employment: Real or Monetary?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 7(2), pages 139-152, December.
    6. Asimakopulos, A, 1983. "Kalecki and Keynes on Finance, Investment and Saving," Cambridge Journal of Economics, Oxford University Press, vol. 7(3-4), pages 221-233, September.
    7. J. A. Kregel, 1985. "Constraints on the Expansion of Output and Employment: Real or Monetary?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 7(2), pages 139-152, January.
    8. A. Bhatt Hakhu & C. Sardoni, 2021. "Public expenditure and growth: the Indian case," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 18(1), pages 77-101, April.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Investment; Saving; Multiplier; Finance.;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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