SAVING IS NEVER A CONSTRAINT ON INVESTMENT1
South African Journal of Economics, 2006, vol. 74, issue 1, 1-5
Saving is regarded in mainstream macroeconomics as a volitional relationship, like consumption. This paper argues that this view is incorrect. There is no independent volitional saving function. Since all goods produced are either consumption goods or investment goods, saving, defined as “income not consumed”, is the accounting record of investment spending. Changes in the definition of investment produce identical changes in saving, with no accompanying volitional change in saving behavior. “Saving” in economics should properly be termed “abstention” since it does not constitute transitive behavior. To understand saving behavior a Hicksian definition of income must be used, and capital gains and losses must be included in the definition of income. In modern capitalist economies most saving undertaken by agents is non‐volitional, and takes the form of permitting the market value of total net wealth to increase.
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:sajeco:v:74:y:2006:i:1:p:1-5
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0038-2280
Access Statistics for this article
South African Journal of Economics is currently edited by Philip A. Black
More articles in South African Journal of Economics from Economic Society of South Africa Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().