Economics Dictionary of ArgumentsHome
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| Saving: In economics, saving is defined as the portion of disposable income that is not consumed._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Thomas Piketty on Saving - Dictionary of Arguments
Bofinger I 138 Saving/Piketty/Schmidt: “Saving” is one of the most ambiguous terms in economics, which can have very different meanings depending on the context: Bofinger I 139 - Net wealth creation: If “saving” means the creation of net wealth, then at the level of private households or the state this is the difference between income in a period and consumption in the same period. For companies it is simply the undistributed profits, i.e. the part of the difference between income and expenditure in the same period that is not distributed to the owners. - Financial asset formation: If 'saving' is used in the sense of financial asset formation, it refers to the difference between income and expenditure in the same period. If an economic entity has spent less than it has earned, its financial assets have increased - but not necessarily its net worth, because financial assets can also have increased due to the sale of tangible assets. - Consumption restriction: 'Saving' in the sense of consumption restriction means that an economic entity reduces its consumption expenditure compared to consumption expenditure in the previous period. This meaning is only relevant for private households and the state, since companies do not consume by definition.(1) - Long-term investment: 'Saving' is often not understood as wealth creation, but as a reallocation of assets, particularly within the portfolio of financial assets. Saving in this sense occurs when existing funds (cash or amounts in a savings account or call money account) are invested over the longer term, for example by purchasing longer-term bonds or shares or in tangible assets. In this case, the portfolio of assets does not change, only the composition of the assets - namely towards a less liquid form of investment, which, however, generally enables a higher return. >Saving. Bofinger I 140 Piketty: The data cited by Piketty (Piketty 2014: 229 ff.)(2) refer to the net wealth creation (primarily in the private sector). The net wealth creation of each sector can be made up of the creation of tangible assets (= net investments) and the creation of monetary assets. As long as the changes in the monetary assets of domestic actors do not cancel each other out, a country as a whole can increase its monetary assets through current account surpluses or reduce its monetary assets through current account deficits. The values cited by Piketty therefore indicate the realized net wealth creation of the countries as a percentage of the (net) national income (NNI). Bofinger I 149 Saving/return/growth/VsPiketty: In his considerations, Piketty has to assume a low growth rate (which he attributes to low population growth and a low, unexplained increase in productivity) and, on the other hand, a substitution elasticity between capital and labor of greater than one in order to explain the greater importance and power of capital. What he overlooks is that an increase in planned savings can lead to a decline in returns and growth - for him, these variables seem to be largely independent of each other. Some basics for Piketty: >Cambridge Capital Controversy, >Geoffrey C. Harcourt, >Capital reversing, >Capital/Joan Robinson, >Exploitation/Robinson, >Reswitching/Robinson, >Reswitching/Sraffa, >Reswitching/Economic Theories, >Neo-Keynesianism, >Neo-Neoclassical Theories. 1. When it comes to the state, the term "state consumption" is also unfortunate, as it actually refers to the state services that the state provides to its citizens. This is usually free of charge, as the state services are not sold on the market but are financed indirectly through taxes. 2. Piketty, T. 2014. Das Kapital im 21. Jahrhundert. München: Beck. Johannes Schmidt. 2015. „Kapital und Sparen bei Piketty: Einige saldenmechanische Anmerkungen“. In: Thomas Piketty und die Verteilungsfrage. Ed. Peter Bofinger, Gustav A. Horn, Kai D. Schmid und Till van Treeck. 2015._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Piketty I Thomas Piketty Capital in the Twenty First Century Cambridge, MA 2014 Piketty II Thomas Piketty Capital and Ideology Cambridge, MA 2020 Piketty III Thomas Piketty The Economics of Inequality Cambridge, MA 2015 Bofinger II Peter Bofinger Monetary Policy: Goals, Institutions, Strategies, and Instruments Oxford 2001 |
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