forced saving

forced saving


involuntary saving

the enforced reduction of CONSUMPTION in an economy. This can be achieved directly by the government increasing TAXATION so that consumers’ DISPOSABLE INCOME is reduced or it may occur indirectly as a consequence of INFLATION, which increases the price of goods and services at a faster rate than consumers’ money incomes increase.

Governments may deliberately increase taxes so as to secure a higher level of forced SAVING in order to obtain additional resources for INVESTMENT in the public sector. A ‘forced saving’ policy is often attractive for a DEVELOPING COUNTRY the ECONOMIC DEVELOPMENT of which is being held back by a shortage of savings.

References in periodicals archive ?
Second, the forced saving and overinvestment of the boom is accompanied by a decline in consumption and shrinkage of the finished consumer goods' manufacturing, wholesale, and retail sectors as resources are reallocated to the higher stages of production.
This brings us to the role of forced saving as the source and impetus to overinvestment.
Second, and more important, is the point that even when circumstances prevailing at the beginning of an inflation foster forced saving to such an extent that resources are released from consumer goods' and other lower stage industries, the situation will inevitably be reversed as the boom progresses.
Hayek's conception of forced saving was different from Mises's, as Roger Garrison (2004) has noted.
Hayek argued that a constant rate of forced saving would require an increasing rate of credit expansion in order to allow capitalists to maintain and expand the labor force and complementary factors devoted to producing an elongated capital structure by successfully countering rising bids for these factors by the producers of consumer goods.
I guess I'd be OK with that; it's kind of like forced saving.
Pay yourself first is a forced saving technique that simply means you consistently set aside a certain amount from your salary each month before you take care of your living expenses or make discretionary purchases.
As an example, Hayek's evolving views on the effects of forced saving and the trade-off between progress and cyclical stability are examined more closely.
3 A Substantive Issue: Hayek's Early View of Forced Saving
As an example we pick out Hayek's view on the possible long-term effects of forced saving, a view closely related to his evolving version of Austrian business cycle theory.
However, in practice, all conceivable monetary systems will deviate from neutrality to some extent and admit forced saving and therefore cyclical fluctuations.