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

Ramzi Abdullah Ahmed Hassan

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Savings; Economic Growth; Capital Formation; Investment; Keynesian Economics; Classical Economics. (search for similar items in EconPapers)
JEL-codes: E21 E22 E62 O16 O40 (search for similar items in EconPapers)
Date: 2024-11-14
New Economics Papers: this item is included in nep-fdg
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