4 Pages Posted: 22 Dec 2009
Date Written: December 22, 2009
Does increased savings result in a "paradox" or not? In this paper, a simple model highlights the assumptions sufficient to make thrift a paradox. It also shows what assumptions are necessary to make thrift a virtue.
Keywords: paradox of thrift, Keynesian model, IS-LM, macroeconomics, savings, investment
JEL Classification: E00, E12, E21, E32, E51, E62
Suggested Citation: Suggested Citation