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There are not two distinct decisions ...
Where have I claimed this?
Sure there is only one decision. But no private preson makes the decision to make an CA surplus. Your first and this comment don't frame the issue in the same way. If you had set, people decide to spend less, instead of what I said, people save more, then this would be the same. And pointing excatly to the reason, why in the short term a problem occurs: because suddenly people spend less.

I don't see really the point you want to make.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Wed Aug 27th, 2008 at 05:01:12 PM EST
[ Parent ]
Yes, but framing it as "if people should save more ..." supports the neoclassical model in which fundamentals establish the equilibrium level of output and a "saving" decision plays an active role in setting the interest rate.

The next round effect of the decision is the loss of spending, both in terms of a reduction in exogenously financed consumer spending and a reduction in the propensity to consume out of income. So the consequential dimension of the decision is the decision to cut back on spending.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Aug 27th, 2008 at 05:35:43 PM EST
[ Parent ]


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