The role of household saving in the modern economy



The work considers the role of household saving in the modern industrial economy. It is argued that an increased saving of households depresses business profits and leads to government deficits. From the point of view of full employment policy household savings are more troublesome than business savings because, unlike the latter, they do not stimulate investment decisions. In light of this the question of functional distribution ceases to be the only matter of concern, and the question of the inequality of personal incomes moves to the foreground. Thus the consideration of the trend of household saving may involve a certain shift in attitudes of economists interested in full employment.


JEL: E21, H31, O16


Household savings, business profits, government deficits, employment

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ISSN 2037-3643

Reg. Tribunale di Roma n.377/2009 del 19/11/2009