How is the savings ratio calculated? Why do the government and enterprises have savings?
National savings consist of that part of national disposable income from all economic sectors not used for consumption during a certain period of time, and is different from savings as understood by the general public.
Net national savings= national disposable income － national consumption expenditure (= private final consumption expenditure ＋ government final consumption expenditure)
Gross national savings= Net national savings＋ consumption of fixed capital
National savings ratio (savings ratio)= gross national savings ÷ GNI
Savings are chiefly derived from three sectors:
1. Savings of general government: As defined in the SNA, savings of general government refers to the difference between current revenues and current expenditures(and not the annual balance). Because government expenditures may constitute either current expenditures or capital expenditures (establishment of assets or amortization of debt), whenever the government's current revenues is greater than its current expenditures, the remainder constitutes savings of general government, which it can be used as a source of financial for capital expenditures.
2. Undistributed profit of enterprises: Here enterprises include special entities specified in ordinary statutes and other entities which, although not complying with statute, are consistent with corporate organizations in terms of their actual profit-seeking, organizational objectives, and distribution of profit. The content of undistributed profit of enterprises include various types of provident during the current period and undistributed profit.
3. Savings of households: savings of households refer to the difference between the disposable income and final consumption expenditures of households (including households and non-corporate enterprises) and private nonprofit institutions serving households.