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Thrift: Paradox or Virtue?

4 Pages Posted: 22 Dec 2009  

Brian Jacobsen

Wells Fargo Funds Management

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

Jacobsen, Brian, Thrift: Paradox or Virtue? (December 22, 2009). Available at SSRN: or

Brian Jacobsen (Contact Author)

Wells Fargo Funds Management ( email )

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