The paper "Domestic Saving Concept" is an outstanding example of a micro and macroeconomic assignment. Domestic saving can also be described as the difference between a household’ s disposable income and the consumption that is incurred. Over a period of time, the saving rates have been constant in most countries and in some others, the saving rates have been fluctuating. However, due to the massive recession that took place between 2007 and 2008 observation of the trend of the saving rates showed that they had stated reversing themselves. In the subsequent year, the saving rates had increased in most of the countries which also became a guideline to show that these trends would continue even in the following year which is 2010.
Many countries like recording and calculating the rate of domestic saving as it enables them to do research on the state of the countries expenditure and this information plays a vital role in making the budget of the country. The domestic saving rate is found by dividing the domestic savings by the domestic income which is disposable. The results may be interpreted differently once received since once one gets a negative rate of saving means that they are using more finances than they acquire.
This on the other hand shows that the debtors in this scenario will increase. The domestic saving rates can be calculated differently and some of these ways include the net or gross basis. However, the net basis of calculating the domestic savings rate is the basis commonly used since it takes into account the depreciation. Domestic saving is a very important part of the economy.
This because they can either affect the country’ s economy either positively or negatively according to how the situation is. The main problem that comes about in the calculation of domestic saving rates is the comparison process. This is where the rates are compared for different countries this problem is also brought about by the differences in countries' pension schemes and tax systems among other things which may affect the income that is disposable in the households. There are also some very important factors that play a huge role in affecting the saving rates these are factors like age, overall wealth, cultural factors and many more.
ReferencesAustralian Government. (2011). The rise in household saving and its implications for the Australian economy. Economic Roundup(2).