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Essay on Saving and Consumption

Author

Listed:
  • Nikola Fabris

    (Central Bank of Montenegro and Faculty of Economics, University of Belgrade)

  • Jelena Galić

    (AIK Bank and Belgrade Banking Academy)

Abstract

Consumption and saving decisions are at the heart of both short- and long-term macroeconomic analyses. Since the global crisis outbreak, one of the main issues for indebted countries has been whether to pursue a policy which promotes saving or to try to induce economic growth by increasing consumption. Consensus has not been reached on this issue, which is based on an old debate of whether a country should pursue a policy of Keynesianism or monetarism. Ergo, this essay discusses arguments supporting both approaches, primarily through theoretical arguments of Keynesianism and monetarism. The authors concluded that in a crisis environment, consumption policy should be given priority; however, a precondition for this is that a country was not overburdened prior to the crisis outbreak, i.e. a successful crisis management policy should, in fact, be pursued over the periods of expansion.

Suggested Citation

  • Nikola Fabris & Jelena Galić, 2015. "Essay on Saving and Consumption," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 4(3), pages 123-136.
  • Handle: RePEc:cbk:journl:v:4:y:2015:i:3:p:123-136
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    File URL: http://www.cbcg.me/repec/cbk/journl/vol4no3-4.pdf
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    References listed on IDEAS

    as
    1. Barth,James R. & Caprio,Gerard & Levine,Ross, 2008. "Rethinking Bank Regulation," Cambridge Books, Cambridge University Press, number 9780521709309, October.
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    Cited by:

    1. Milutin Ješić & Miomir Jakšić, 2020. "The Impact of Institutional Features on R&D in Business Enterprise Sector and Sustainable Growth," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(3), pages 61-76.
    2. Nataliia Pochernina & Tetiana Krasnoded, 2019. "Оцінка Ефективності Механізму Мобілізації Заощаджень Домогосподарств На Макрорівні [Evaluating the Efficiency of the Mechanism for Mobilizing Household Savings at the Macro level]," Traektoriâ Nauki = Path of Science, Altezoro, s.r.o. & Dialog, vol. 5(3), pages 5001-5010, March.

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    More about this item

    Keywords

    consumption; saving; Keynesianism; monetarism; crisis;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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