Saving and Investment in US Economic Growth

22 Pages Posted: 24 Nov 2014

See all articles by Wilson N. Sy

Wilson N. Sy

Investment Analytics Research

Date Written: November 11, 2014

Abstract

Key economic concepts of saving and investment are defined and discussed in this paper. It is shown that the equation “saving=investment” is a fundamental fallacy of macroeconomics due to a confusion between real and financial variables, and also between stock and flow variables. Economic growth is shown to be driven by investment, not by consumption as Keynes would have it or by saving as Hayek would have it. The Keynesian fallacy of “saving=investment” in the national account has masked four decades of “borrowing and spending” in the US, leading to negative saving rates, accumulation of enormous debt, negative productivity and a stagnating economy.

Keywords: saving, investment, growth, scientific, macroeconomics

JEL Classification: A22, B22, B41, E12, E21, E23, H62, O11

Suggested Citation

Sy, Wilson N., Saving and Investment in US Economic Growth (November 11, 2014). Available at SSRN: https://ssrn.com/abstract=2529559 or http://dx.doi.org/10.2139/ssrn.2529559

Wilson N. Sy (Contact Author)

Investment Analytics Research ( email )

12 Gilchrist Place
Balmain East, NSW 2041
Australia
0424669802 (Phone)

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