28 Macroeconomic Savings
Macroeconomic Savings are of fundamental importance for the economic balance equation:
(28.1)
which can be integrated easily in a natural way to
.
We have used the fact that the sum of all the capital stockis represented by K and represents the annual increase in capital stock. In economic termsis now investment, because we can regardas the sum of new products:
(28.2)
So we obtain the well known relationship60 in classical macroeconomics between investment I and savings S
(28.3)
and so finally
(28.4).
Nota bene:
Savings S are always including interest rates () on the whole
capital stock K, and Investments I are into real economy and into
financial products too. This is very different to common classical economy,
where is stated I=S to, but is meant as savings without interest rates
and investment only to the real economy. This classical misconception leads to
a lot of practical problems with predicting growth.