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Market Clear-up and Economic Growth

Hao Wen-ji

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Abstract

It is a basic conclusion that saving equals investment in macroeconomic textbooks, and that high investment or saving rate brings about high growth rate of economy, as is accepted by most of the economists. Recent analyses indicate that the recession of economy is caused by low consuming rate owing to high saving rate. It is argued saving is larger than investment but gives no reason. This paper tries to analyze the macroeconomic system, and maintain that the problem lies in the concept in economic analysis that investment is equal to saving, as actually involves unrealized investment as well as consumption, which calls for clearing market.

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It is a basic conclusion that saving equals investment in macroeconomic textbooks, and that high investment or saving rate brings about high growth rate of economy, as is accepted by most of the economists. Recent analyses indicate that the recession of economy is caused by low consuming rate owing to high saving rate. It is argued saving is larger than investment but gives no reason. This paper tries to analyze the macroeconomic system, and maintain that the problem lies in the concept in economic analysis that investment is equal to saving, as actually involves unrealized investment as well as consumption, which calls for clearing market.

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Available abstract

It is a basic conclusion that saving equals investment in macroeconomic textbooks, and that high investment or saving rate brings about high growth rate of economy, as is accepted by most of the economists. Recent analyses indicate that the recession of economy is caused by low consuming rate owing to high saving rate. It is argued saving is larger than investment but gives no reason. This paper tries to analyze the macroeconomic system, and maintain that the problem lies in the concept in economic analysis that investment is equal to saving, as actually involves unrealized investment as well as consumption, which calls for clearing market.

Key concepts: Investment (military), Economics, Recession, Consumption (sociology), Monetary economics, Clearing, Market clearing, Market economy

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