Saving is a topic of discussion that
always is present in the differences academic fields, political and social
aspects of the country. This is because saving is considered an element
essential in the process of capital accumulation and for economic growth. In
aggregate terms, savings is the process by which an economy reserve part of your
product and use it to generate income in the future. The people, companies and
governments save. Family units keep money to buy a house and for retirement,
for example; the companies accumulate profits to build new factories, and
governments accumulate assets in pension systems and infrastructure. The added
saving constitutes the main limitation on global investment spending and
therefore also plays a crucial macroeconomic role. The level of saving and the
variation in assets that prevail in a country are determined by the choice of
consumption and investment of different agent’s economic factors that make it
up, since when individuals consume a basket of goods in the present are
deciding their consumption later and to the for a certain level of savings and
possession of assets that allows them to maintain a uniform consumption along
an intertemporal horizon. It is precisely the choice between consumption and
savings that contributes to the determination of the growth rate of the
economy, investment, the balance commercial, the level of product and
employment of a country. But the influence of savings on such indicators is not
established in a direct, but rather indirectly, that is, through investment.
The evolution of investment or gross fixed capital formation makes it possible
to increase the levels of economic activity in the country, since this flow,
given a demand for goods and services, produces jobs and enables the
implementation of the productive apparatus of the country. Consequently, the
possibility that countries in development as United State achieve the growth
goals set requires resources to finance the investment. In recent years due to
the global economics instability and the characteristics of the United States
economy, there have been cycles of increasing recurrence expansion and economic
recession. This phenomenon puts pressure on the level of savings in the country
and the need for external resources whose absorption is increasingly difficult
due to the acute competition among developed countries, which they are in
development and countries are transitioning to market economies. The importance
of a study about saving and the variation in assets in this country, of which
its behavior and its relation to other variables to propose measures that boost
the economic growth of the country, since having a model that expresses the
intertemporal behavior of saving and the variables related to it we can predict
its long term trend and its influence on growth economic and thus recognize the
emergence of periods of possible economic instability as a consequence of
insufficient savings in United Stated.

This investigation stars from the
fact of that to generate higher rates of economic growth, it is necessary to
promote the increase in internal savings as a healthy source of financing. The
essential elements for the analysis on the behavior of saving and the variation
of assets from a point of view econometric, suing modern econometric
techniques.

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The determinants of savings in United
State: 

Within the framework of the social
and economic relations in which the economics agents, there are many reasons
why individuals take the decision to save, these reasons usually come together
in two large aggregates: the reasons and the determinants of savings. The first
one refers to the circumstances according to which it is decided not to consume
the entire income of the individuals, that is, the fate that will be given in
the future to such an unspent income. The second deals with the economic and
non-economic variables consider determining your level of savings. The reasons
why an individual save is fundamentally four:

1.    
The forecast of the consumption expense that
will be made after the retirement of the economic activity, which depend on the
stage of life in which it is located, which acts in a long-term horizon.

2.    
The precaution before uncertainties that appear
in the short term.

3.    
The planning that is done to invest or to place
funds at a positive real interest rate.

4.    
The need or despise to leave a legacy or an
inheritance.

The most important determinants of the savings level of the
economies they are generally: the level of income or the growth of the product,
the interest rate current and expected, the exchange rate, external savings,
the wealth of families, the inflation and the structure of the population.

Income: in the
simple Keynesian model, saving is a functions of disposable income current, its
coefficient being the marginal propensity to save. For its part, the reason
savings to income represents the average propensity to save that is assumed to
increase with income.

Liquidity
restriction: if a liquidity restriction operates, economics agents would be
prevented from increasing their current consumption and, therefore, could
increase the saving. If the agents were unable to borrow, against future
income, they would save more, or they would save less, than in an opposite
situation. In an extreme case if exogenous credit restrictions are assumed,
individuals consume all their current income. However, this is not necessarily
the case when these restrictions are endogenize and the current marginal
propensity to consume income less than one. Do not however, as in the extreme
case, consumption will show greater sensitivity to changes in the current
income.

The interest rate: changes
in real interest rates would have an effect indeterminate a priori on aggregate
saving, given that the result will depend on the strength of the income and
substitution effects. Due to the decision process intertemporal consumption, an
increase in real interest rates would increase the savings (the present cost of
the future consumption decreases), since it encourages postponing the
consumption, but the income effect (it would not be necessary to save as much)
would act in otherwise, which could negatively affect savings decisions.

Inflation: the
acceleration of inflation rates would reduce the actual cost of indebtedness
and would have a positive effect on consumption and negative effect on the
saving. However, some authors suggest that higher inflation rates would reduce
the real value of financial wealth, which could stimulate saving (for example,
if the agents had an income-wealth objective), while the uncertainty regarding
future income, generated by inflation, would increase savings for a reason
precautionary, in the case of risk averse agents. Inflation could also reduce
the consumption of indebted agents, who face a liquidity restriction, due to
the that the inflation premium, in nominal interest rates, would lead agents to
accelerate the repayment of your debt. This would favor an increase in savings.

External savings: without
external liquidity constraints, economic agents could to borrow abroad and
follow consumption behavior that is mitigated over time. In this sense, the
greatest external savings (worsening of the balance of the current account)
would act as a substitute for domestic savings, as it would tend to close the
gap between domestic investment and the domestic savings rate. It would be
possible to wait, therefore, for external capital flows are negatively
associated with domestic savings. However, some authors suggest that external
capital could favor development of the internal economy and generate more
income, which would have an impact positive about savings. This would reflect an
indeterminate final affect between the flows of external capital and aggregate
saving.

The wealth effect: according
to the life cycle hypothesis, agents would reduce savings rates, if the capital
gains improve your net wealth position, due, for example, to an appreciation of
the assets. This effect could be more important in the years of agent
retirement.

Population structure:
aggregate saving could be affect by changes in the age distribution of the
population. If there were greater number of inactive people, in comparison with
the number of people that work, the added savings would be low. In change, a
greater proportion of active people would be associated with higher income
added in the life time and with a higher saving rate. For Modigliani the changes
in the demographic structure of the population play an key role for explain the
saving behavior of the economy, if for example, savings people they were more
numerous and richer than others.

The distribution of
income: the life cycle model does not consider the distribution of income
of economic people. However, it is possible that the population of higher store
income to save a greater proportion of them, compared to the lower income.
Accordingly, the countries with the most distribution inequitable income would
see higher savings rate, while policies that pursue a more equitable
distribution of income could generate a decrease of added savings.

 

Main studios on saving and heritage
variation.

In the case of United State, even though saving is a
fundamental variable in the argumentation of the country’s economic policy,
studies and bibliography savings are relatively scares compared to the enormous
number of studies existing on other relevant macroeconomic variables. But even
more scarce is the bibliography that deals with the subject of saving,
variation patrimonial and economic growth. It seems that most of the studies
that address the problem of growth in developed countries and underdeveloped
countries, they analyze the problem from a very limited only circumscribe to
the study of this variable in general way, is say, the make an analysis with
joint information from different countries, regardless of the heterogeneity of
the databases of the accounting systems of each country. In aggregate terms,
saving is the process through which an economy reserves part of its product and
uses it to generate income in the future. Therefore, its determination depends
on a large number of variables, both economic, social and demography.  In recent years, there has been growing
interest in related issues with economic growth. One of the most remarkable and
permanent relationship of the comparative data between savings and grows rates
of the product. There are different models and empirical studies that have
analyzed several aspects of growth, including of course the conditions that
propitiate increase and sustain over time.  In the analyzes of the problems of the growth
some authors usually observe that low rates of savings and capital accumulation
are one of the most important reasons significant reason why Latin American
countries do not achieve growth sustained from their economies.

One of the reasons why domestic savings are important for
the economy national resides in the role it plays in the process of capital
accumulation, but the study of savings is also important for other reasons. A
fundamental motivation of individuals to save resides in the possibility of
transferring resources of period to another to maintain a stable consumption
against changes in the time of income.

 

It is very important to educate ourselves more in terms of
finances, to acquire savings. Because many sectors of society are speculating
on how to correct the economics problems that are affecting the daily life of
many people. But how ca we correct those economic problems, when we do not have
education on how to save and how to invest. Technological advances and
innovation have contributes contributed to complicate the business world, since
now there are many services and financial products that are available to
investors. Someone might think that the solution to the multiplicity of
economic problems could be to implement more stringent rules and be strict with
bankers or business representatives. However, Ben S. Bernanke and some of the
Federal Reserve Banks have considered the investment of money, time and effort
in financial education programs as solutions. 

Also, there are others who have thought that such a solution
will be a great investment in human capital at an early age because this gives
people the opportunity to recover their investment throughout their working
life. We must recognize that today’s student’s own homes and business on the
future, and it is important that young people know about the credit when it
comes to buying a home. Therefore, an early education about finances is very
important for the development of an individual that pretends to be useful to
society.     

 

Conclusion

The savings and the economic growth is established
unidirectional growth economic to domestic savings and not vice versa. External
saving has been a variable in recent years economic situation, from which the
economy becomes more dependent due to the insufficiency of internal resources
to finance the investment, servings as the alternative fundamental substitute
for domestic savings for such purposes. This increases the external
vulnerability economic of this country, and one of the main challenges to
achieve sustained growth is to close the gap between external savings and
investment through the substitution of external resources for internal ones.

According to the analysis presented above, it can be
affirmed that the internal savings is the internal income, and this can be
explained because the agent’s economic changes when observing in current income
or waiting for a change in their future consumption, at the same time the level
of savings and investment.  Non-financial
companies, company’s financial institution, general government, private
nonprofit households, institutions and the rest of the world, thereby expanding
the availability of economics statistic of the country and opens the way for
more precise research about savings, equity variation and economic growth.

Education is the key to being successful and having a better
life. Also, this research emphasizes the value of financial education as a tool
to train people to make correct decisions without fear of being wrong, or
perhaps, evicting making a wrong decision.