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National SavingsIn economics, a country's national savings is a the sum of private and public savings. It is generally equal to a nation's income minus consumption and government purchases. Economic model of national savings In this simple economic closed economy model there are three uses for GDP, (the goods and services it produces in a year). If Y is national income/GDP, then the three uses of C consumption, I investment, and G government purchases can be expressed as: National savings can be thought of as the amount of remaining money that is not consumed, or spent by government. In a simple model of a closed economy, anything that is not saved is assumed to be invested: -
National savings can be split into private savings and public savings. A new term, T is taxes paid by consumers that goes directly to the government as shown here: -
With (Y - T - C) being disposable income (Y - T) less consumption is private savings. The term (T - G) is government revenue though taxation minus government expenditures which is public savings.
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