economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...

, saving-investment balance or I-S balance is a balance of

national savings National Savings and Investments (NS&I), formerly called the Post Office Savings Bank and National Savings, is a state-owned savings bank in the United Kingdom. It is both a non-ministerial government department and an executive agency of HM T ...

and national investment, which is equal to current account. This relationship is obtained from the national income identity.

Description

This is the national income identity: :

Y=C+I+G+(EX-IM)

where *Y:

GDP Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performance o ...

, *C: national

consumption Consumption may refer to: * Eating *Resource consumption *Tuberculosis, an infectious disease, historically known as consumption * Consumer (food chain), receipt of energy by consuming other organisms * Consumption (economics), the purchasing of n ...

, *I: national investment, *G:

government spending Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual or ...

, *EX:

export An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is a ...

, *IM:

import An importer is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. Import is part of the International Trade which involves buying and receivin ...

, *EX－IM: current account. The national income identity can be rewritten as following:Christiano, 2003
Rough Notes on National Income Accounting and the Balance of Payments
Northwestern University, p.3. :

(Y-T-C)+(T-G)-I=EX-IM

where T is defined as

tax A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...

. (Y-T-C) is savings of

private sector The private sector is the part of the economy which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The private sector employs most of the workfo ...

and (T-G) is savings of government. Here, we define S as National savings (= savings of private sector + savings of government) and rewrite the identity as following: :

S-I=EX-IM

This identity implies that the difference of national savings and national investment is equal to current account.Tejvan Pettinger, 2012
Current Account = Savings – Investment
EconomicsHelp.org, accessed 3 February 2015.

References

{{reflist International finance

Description

See also

References