I am doing an econometrics project and I understand the way to calculate private savings is (Y-T-C) but what data would I need to calculate that to apply it to the private population?  I know that...

I am doing an econometrics project and I understand the way to calculate private savings is (Y-T-C) but what data would I need to calculate that to apply it to the private population?  I know that the savings rate reflects the ratio saved to total income but I want to know how much savings increased or declined throughout the year.

Asked on by skyler93

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

I am not completely sure where you are stuck.  It seems to me that you have the information you need.

As I understand it, you are looking for the private saving rate in a given country.  You know that the private savings are determined by taking the GDP (Y) and then subtracting taxes (T) and consumption (C).  That will give you the amount that people in the country that you are studying have saved over the past year.  You then divide that by the total income to get the rate of saving. 

To find out how much the savings increased or declined from year to year, all you have to do is to find the saving rate for a number of years.  You can then compare those rates and see whether savings has increased or declined.  You can determine the percent increase (or decrease) by using the formula

(Rate in Year X – Rate in Year W)/Rate in Year W

Where Year W comes before Year X in time.

I hope this is what you needed to know.  If you would like to clarify, please ask another question.

Sources:

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