IDEAS home Printed from https://ideas.repec.org/a/eip/journl/y2019i3p7-39.html
   My bibliography  Save this article

The rate of gross savings: theory and practice

Author

Listed:
  • I. KRYUCHKOVA

Abstract

Scientific justification of the rate of gross savings is one of the key issues in the models of economic growth and a fundamental parameter of economic architectonics in the context of long-term dynamics of growth and structure of total demand. The article aims at demonstrating the genesis of the theory of the rate of gross savings beginning from the classics of political economy to theoretical justifications of the endogenization of the rate of savings in the models of economic growth as well as a detailed consideration of the components of gross savings with the analysis of the factors affecting its level (based on statistical data). It is exactly the empirical analysis that allows testing the validity of theoretical concepts and determining the correctness of the theorists' conclusions. The author shows a great gap between the classical view of the savings rate as a result of the action of natural law, which leads to self-regulation of the parameters of production reproduction, on the one hand, and the purely rational views shaped during the formation and development of the theory and models of economic growth, on the other. Empirical studies have shown that the rate of savings and the rate of capital accumulation are different in the economies of different countries and depend on: the degree of government intervention in the distribution of gross disposable income between institutional sectors and in the structure of households by income level, the level of public social transfers, the depth of income misbalances and expenditure of the institutional sectors and, accordingly, their net borrowing and accumulated debt, as well as on the current phase of the economic cycle and quality of the investment environment. The practical relevance of the study is important to substantiate fiscal policy, especially regarding its impact on the level of gross savings in the non-financial corporations and government sectors, as well as the level of public social and capital expenditures.

Suggested Citation

  • I. Kryuchkova, 2019. "The rate of gross savings: theory and practice," Economy and Forecasting, Valeriy Heyets, issue 3, pages 7-39.
    • Handle: RePEc:eip:journl:y:2019:i:3:p:7-39
    as

    Download full text from publisher

    File URL: http://eip.org.ua/docs/EP_19_3_07_uk.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
    2. Nicholas Kaldor, 1955. "Alternative Theories of Distribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(2), pages 83-100.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. I. Kryuchkova, 2016. "Macrostructural design of the economies of Ukraine and OECD countries," Economy and Forecasting, Valeriy Heyets, issue 3, pages 7-28.
    5. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    6. David Cass, 1965. "Optimum Growth in an Aggregative Model of Capital Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 233-240.
    7. Blinder, Alan S, 1975. "Distribution Effects and the Aggregate Consumption Function," Journal of Political Economy, University of Chicago Press, vol. 83(3), pages 447-475, June.
    8. I. Kryuchkova, 2014. "The misbalances of incomes and expenditures in the institutional sectors of Ukraine's economy," Economy and Forecasting, Valeriy Heyets, issue 3, pages 20-31.
    9. I. Kryuchkova, 2013. "Disproportions of Ukraine's gross available income and their impact on GDP dynamics," Economy and Forecasting, Valeriy Heyets, issue 3, pages 121-137.
    10. Aoki, Shuhei & Nirei, Makoto, 2013. "Pareto Distributions and the Evolution of Top Incomes in the U.S," MPRA Paper 47967, University Library of Munich, Germany.
    11. I. Kryuchkova, 2014. "Decline of gross savings in Ukraine by institutional sectors," Economy and Forecasting, Valeriy Heyets, issue 4, pages 7-22.
    12. Simon Kuznets & Lillian Epstein & Elizabeth Jenks, 1946. "National Product since 1869," NBER Books, National Bureau of Economic Research, Inc, number kuzn46-1.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Matthew Higgins & Daniel Levy & Andrew T. Young, 2003. "Growth and Convergence across the US: Evidence from County-Level Data," Working Papers 2003-03, Bar-Ilan University, Department of Economics.
    2. Alejandro Diaz-Bautista, 2005. "Regional Convergence of Income and Labor Productivity in Mexico," Urban/Regional 0512016, University Library of Munich, Germany.
    3. Charles R. Hulten, 2000. "Total Factor Productivity: A Short Biography," NBER Working Papers 7471, National Bureau of Economic Research, Inc.
    4. repec:ebl:ecbull:v:2:y:2002:i:1:p:1-15 is not listed on IDEAS
    5. Andrew T. Young & Matthew J. Higgins & Daniel Levy, 2004. "Heterogeneity in Convergence Rates and Income Determination across U.S. States: Evidence from County-Level Data," Working Papers 2004-1, Bar-Ilan University, Department of Economics.
    6. Robert J. Barro, 1994. "Democracy & Growth," NBER Working Papers 4909, National Bureau of Economic Research, Inc.
    7. Jose Alves, 2019. "The impact of tax structure on investment: an empirical assessment for OECD countries," Public Sector Economics, Institute of Public Finance, vol. 43(3), pages 291-309.
    8. Francisco de Castro Fernández & José Manuel González Mínguez, 2008. "The composition of public finances and long-term growth: a macroeconomic approach," Occasional Papers 0809, Banco de España.
    9. Seethepalli, Kalpana & Bramati, Maria Caterina & Veredas, David, 2008. "How relevant is infrastructure to growth in East Asia ?," Policy Research Working Paper Series 4597, The World Bank.
    10. ERREYGERS, Guido & FEREDE, Tadele, 2009. "The end of subsistence farming: Growth dynamics and investments in human and environmental capital in rural Ethiopia," Working Papers 2009008, University of Antwerp, Faculty of Business and Economics.
    11. Aykut Kibritçioglu, 2002. "On the Smithian origins of "new" trade and growth theories," Economics Bulletin, AccessEcon, vol. 2(1), pages 1-15.
    12. Iris Claus & David Haugh & Grant Scobie & Jonas Tornquist, 2001. "Saving and growth in an open economy," Treasury Working Paper Series 01/32, New Zealand Treasury.
    13. Edward C. Prescott, 1986. "Theory ahead of business cycle measurement," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 10(Fall), pages 9-22.
    14. Roberto Ezcurra, 2001. "Convergencia Y Cambio Estructural En La Unión Europea," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 0111, Departamento de Economía - Universidad Pública de Navarra.
    15. Andrew Young & Daniel Levy & Matthew Higgins, 2004. "Many Types of Human Capital and Many Roles in U.S. Growth: Evidence from County-Level Educational Attainment Data," Public Economics 0403002, University Library of Munich, Germany.
    16. Honorata Howaniec & Marcin Lis, 2020. "Euroregions and Local and Regional Development—Local Perceptions of Cross-Border Cooperation and Euroregions Based on the Euroregion Beskydy," Sustainability, MDPI, vol. 12(18), pages 1-21, September.
    17. Jaime Andrés Collazos & Pedro Luis Rosero, 2010. "¿Posee el Valle del Cauca una economía transformadora de importaciones orientadas a la Exportación?," Documentos de Políticas Públicas 6880, Universidad Icesi.
    18. Lee E. Ohanian, 2008. "Back to the future with Keynes," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Jul, pages 10-16.
    19. Orlando Gomes, 2005. "Knowledge creation and technology difusion: a framework to understand economic growth," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 20(2), pages 41-61, December.
    20. Murat Arik, 2007. "The Role of Career Colleges in Tennessee: Their Size, Contribution to Workforce Earnings, and Impact on Tennessee's Economy," Studies 200702, Middle Tennessee State University, Business and Economic Research Center.
    21. Robert J. Barro, 2003. "Determinants of Economic Growth in a Panel of Countries," Annals of Economics and Finance, Society for AEF, vol. 4(2), pages 231-274, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eip:journl:y:2019:i:3:p:7-39. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Iryna Bazhal (email available below). General contact details of provider: http://eip.org.ua/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.