The Role of Household Saving in the Modern Economy

The special role of household saving in the modern industrial economy may well be worth considering, if only because of certain features suggested by available data: expressed as a ratio of GDP, these savings seem to show an increasing trend in several countries in the last two decades. Again, observation of the same ratio seems to show that it is rather inflexible in face of cyclical changes, responding little or sometime even perversely to a fall in incomes. In this respect it reacts quite differently from business savings.