Savings rate and economic policy: notes on the possibilities of growth in an economy with restrictions

ABSTRACT

The article discusses the relationship between savings and economic growth, to integrate the main contributions of the models based on the hypothesis of full employment and those which assume the existence of idle capacity. The text develops a hybrid model to show that the effectiveness of the policies depends on the real situation of each economy. Thus, useful recommendations in a given context may be completely miscarrying in another one. Having this theoretical framework as guidelines, it is presented three paradigmatic cases and analysed the effects over investment expected in each different situation, as result of official policies.

KEYWORDS:
Savings; models of economic growth