Saving is never a constraint on investment

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dc.contributor.authorMoore B.
dc.date.accessioned2011-05-15T15:57:41Z
dc.date.available2011-05-15T15:57:41Z
dc.date.issued2006
dc.description.abstractSaving 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. © 2006 The Author. Journal compilation © 2006 Economic Society of South Africa.
dc.description.versionArticle
dc.identifier.citationSouth African Journal of Economics
dc.identifier.citation74
dc.identifier.citation1
dc.identifier.issn382280
dc.identifier.other10.1111/j.1813-6982.2006.00044.x
dc.identifier.urihttp://hdl.handle.net/10019.1/10538
dc.subjectinvestment
dc.subjectmacroeconomics
dc.subjectsavings
dc.titleSaving is never a constraint on investment
dc.typeArticle
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