Saving does not equal investment

Boonserm Booncharoenpol

Macroeconomics from University Library of Munich, Germany

Abstract: SAVING 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.

Keywords: Keynes; saving; investment; S does not equal I; Confusion about saving (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
Pages: 2 pages
Date: 2005-10-16
New Economics Papers: this item is included in nep-mac
Note: Type of Document - doc; pages: 2
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0510014

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