Savings, Income Distribution, Growth, and Finance

  • Paul Davidson


In the real sector of the economy, at any point of time, the realised level of effective demand depends on (a) the supply offerings and hiring commitments of entrepreneurs in conjunction with (b) the spending (and therefore savings) behaviour of the various economic decision-makers. Spending behaviour can be viewed as consisting of two basic types:
  1. (1)

    those endogenous expenditures which are directly associated with currently generated monetary income, and

  2. (2)

    those autonomous expenditures which are not constrained by, or necessarily associated with, current income. In a simple two sector economic model, the former are associated with consumption spending and the latter with investment spending.



Capital Good Capital Gain Full Employment Spot Market Household Saving 
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  1. 1.
    L. L. Pasinetti, ‘The Rate of Profit and Income Distribution in Relation to Economic Growth’, Rev. of Econ. Stud., 29 (1962) pp. 267–79.CrossRefGoogle Scholar

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© Paul Davidson 1978

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  • Paul Davidson

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