Understanding the Impact of Savings on Growth: A Case Study of Yemen’s Economic Challenges

Hassan, Ramzi Abdullah Ahmed (2024): Understanding the Impact of Savings on Growth: A Case Study of Yemen’s Economic Challenges. Published in: Current Trends in Business Management , Vol. 3, No. 2

Abstract

This paper examines the impact of savings on economic growth, a critical topic in economic theory with differing views from classical and Keynesian perspectives. Classical economic theory posits that savings drive economic growth by providing funds for investment, while Keynesian theory argues that savings can reduce aggregate demand and slow growth. The study also looks at factors that influence saves behavior, such as income, interest rates, and cultural views, as well as different types of savings, such as personal, corporate, and government savings. The findings show that savings are critical to long-term economic growth because they fuel investments and stabilize economies during downturns. However, the relationship between saves and growth is complicated, as excessive savings can stifle growth if not properly channeled toward productive investment. The study suggests that savings' function in economic development significantly depends on how they are used and handled within an economy. Future research should focus on the importance of saves in various economic settings, as well as the efficacy of policies aimed at increasing the influence of savings on growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Savings, Economic Growth, Capital Formation, Investment, Keynesian Economics, Classical Economics.
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General

References

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