saving

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saving

the proportion of a person's (personal saving), company's or institution's (retained profits) income that is not spent on current consumption. Savings are typically placed on deposit with a BANK, BUILDING SOCIETY, etc., or used to acquire financial and physical assets such as SHARES or plant. By forgoing immediate spending on consumption, savers seek to augment their future income through dividends, interest and rent receipts and through capital appreciation.

In macroeconomic analysis, saving is the proportion of current NATIONAL INCOME that is not spent on current consumption and as such is a WITHDRAWAL from the CIRCULAR FLOW OF NATIONAL INCOME.

In the simple circular flow model, all saving is undertaken by households; in the extended model, saving is also undertaken by businesses (retained profits) and the government (budget surplus).

In real terms, saving is important in that it ‘finances’ physical INVESTMENT. Saving (forgoing current consumption) releases resources that can be devoted to increasing the country's CAPITAL STOCK and hence its capacity to produce a greater quantity of goods over time. See also SAVINGS SCHEDULE, PARADOX OF THRIFT, INDIVIDUAL SAVINGS ACCOUNT (ISA), PREMIUM BOND.

References in periodicals archive ?
We accept the claim of Feldstein and Horioka (1980) and their followers that there exist home bias in the allocations of domestic saving due to various reasons that are mentioned in the literature.
Debt financed by foreign (borrowed) savings is generally more risky and susceptible to instability than debt financed by domestic savings.
Data on domestic savings rate have been collected from Economic Survey of Iran Finally, data for market capitalization has been obtained from statistical bulletins of State Bank of Iran (various issues).
The present government needs to focus the reforms which insure increase in domestic savings and tax collection- particularly to bring the rich-vested interest group and powerful into tax net.
A quick review of literature on the relationship between savings and economic growth indicates a positive relationship between domestic savings and economic growth.
The country's AA+ rating draws comfort from its structural strengths, in particular its well-developed, diversified economy with high level of income per capita, high domestic savings and low private sector debt, the agency said.
Ethiopia's Central Bank says it hiked interest rates to boost domestic savings, deal with a shortage of domestic investment capital for small and medium businesses and sustain the country's construction industry boom.
Mumbai, July 13 (ANI): Finance Minister Pranab Mukherjee on Tuesday said the domestic savings have always played a major role in Indian economy and therefore there is a need to bring the savings of the people of the unorganized sectors into banking mainstream.
The first applies the basic principles of supply and demand to a variety of day-to-day topics--from enacting legislation to evolution; the second applies the basic principles of benefit-cost analysis to international trade and finance and domestic savings.
Surplus savings, which are gross domestic savings less gross domestic investment, represent a country's current account balance.
Turkey should boost its domestic savings against decrease in foreign capital inflow to the country, Okonjo-Iweala said.

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