Savings identity

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Savings identity or the savings investment identity is a concept in economics stating that the assumption that the amount saved (S) in an economy will be amount invested (I).

Adam Smith notes this in The Wealth of Nations and it figures into the question of general equilibrium and the general glut controversy. In the general equilibrium model savings must equal investment for the economy to clear.

[edit] References

• Farrokh K. Langdana. Macroeconomic Policy: Demystifying Monetary and Fiscal Policy. (2002) ISBN 1402071469