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Saving Measures As Economic Growth Indicators

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  • WILLIAM E. Cullison

Abstract

The decline of the U.S. saving rate during the 1980s and its potential impact on future economic growth has been the subject of considerable concern. The National Income Accounts (NIA) measures of saving are the empirical basis for the concern. However, the economics literature has soundly criticized the NIA concepts of saving and investment. Moreover, little evidence exists that the United States suffered a capital shortage during the 1980s, when it enjoyed its second longest peacetime economic expansion. This paper examines the relation of NIA and other saving measures to future real GDP. Findings indicate that no measurable relation exists between the lagged NIA saving measures and real GDP. However, findings also indicate a significant relation does exist between real GDP and the sum of personal saving from the flow‐of‐funds accounts plus an approximation of government saving for infrastructure purposes. Unlike the NIA saving rate, this constructed saving rate did not decline precipitously in the 1980s. Since the saving rate relevant to economic growth did not fall, the future of the U.S. economy might not be nearly so bleak as many assume.

Suggested Citation

  • WILLIAM E. Cullison, 1993. "Saving Measures As Economic Growth Indicators," Contemporary Economic Policy, Western Economic Association International, vol. 11(1), pages 1-8, January.
    • Handle: RePEc:bla:coecpo:v:11:y:1993:i:1:p:1-8
    DOI: 10.1111/j.1465-7287.1993.tb00366.x
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    References listed on IDEAS

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    Cited by:

    1. Dr. Tariq Ahmad BHAT & Tariq Ahmad LONE & Dr. Khursheed Hussain DAR, 2021. "The co-integration and causal relationship between saving and economic growth in India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(626), S), pages 239-246, Spring.
    2. William E. Cullison, 1993. "Public investment and economic growth," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 19-34.
    3. Chor Foon Tang & Soo Y. Chua, 2012. "The savings-growth nexus for the Malaysian economy: a view through rolling sub-samples," Applied Economics, Taylor & Francis Journals, vol. 44(32), pages 4173-4185, November.

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