<abstract xmlns="http://www.w3.org/1999/xhtml"><p> Consumption and saving decisions are at the heart of both short- and long-term macroeconomic analyses. Since the global crisis outbreak, one of the main issues for indebted countries has been whether to pursue a policy which promotes saving or to try to induce economic growth by increasing consumption. Consensus has not been reached on this issue, which is based on an old debate of whether a country should pursue a policy of Keynesianism or monetarism. </p><p>Ergo, this essay discusses arguments supporting both approaches, primarily through theoretical arguments of Keynesianism and monetarism. The authors concluded that in a crisis environment, consumption policy should be given priority; however, a precondition for this is that a country was not overburdened prior to the crisis outbreak, i.e. a successful crisis management policy should, in fact, be pursued over the periods of expansion.</p></abstract>

Consumption and saving decisions are at the heart of both short- and long-term macroeconomic analyses. Since the global crisis outbreak, one of the main issues for indebted countries has been whether to pursue a policy which promotes saving or to try to induce economic growth by increasing consumption. Consensus has not been reached on this issue, which is based on an old debate of whether a country should pursue a policy of Keynesianism or monetarism. Ergo, this essay discusses arguments supporting both approaches, primarily through theoretical arguments of Keynesianism and monetarism. The authors concluded that in a crisis environment, consumption policy should be given priority; however, a precondition for this is that a country was not overburdened prior to the crisis outbreak, i.e. a successful crisis management policy should, in fact, be pursued over the periods of expansion.

Essay on Saving and Consumption

Central Bank of Montenegro and Faculty of Economics, University of Belgrade

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Essay on Saving and Consumption"}

Consumption and saving decisions are at the heart of both short- and long-term macroeconomic analyses. Since the global crisis outbreak, one of the main issues...

Essay on Saving and Consumption

Published Online: Oct 07, 2015

Page range: 123 - 136

Received: Apr 20, 2015

Accepted: May 13, 2015

DOI: https://doi.org/10.1515/jcbtp-2015-0014

Keywords
consumption, saving, Keynesianism, monetarism, crisis

© Central Bank of Montenegro

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Essay on Saving and Consumption

Published Online: Oct 07, 2015

Page range: 123 - 136

Received: Apr 20, 2015

Accepted: May 13, 2015

DOI: https://doi.org/10.1515/jcbtp-2015-0014

Keywordsconsumption, saving, Keynesianism, monetarism, crisis

© Central Bank of Montenegro

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
consumption, saving, Keynesianism, monetarism, crisis