Marginal savings rate
The marginal savings rate (also: marginal tendency to save , Grenzrate zum Sparen ) describes the proportion of income that private households in an economy save on the next additional (marginal) income unit , i.e. H. do not consume (spend). It is fundamental to the development of the Keynesian total model and the multiplier .
The marginal propensity to save can be derived from the consumption function. In a simple (model) economy without the state and foreign trade, the national income can be represented as follows:
(a) , d. That is, the entire national income ( ) goes to the private sector, which consumes ( ) and saves ( ) it.
Both consumption and saving can thus be assumed to be dependent on national income, i.e. This means that consumption increases as income increases:
describes the so-called autonomous consumption , which is carried out with an income of zero ( ) (saving, e.g. by selling assets such as securities or residential property). For every increase in income by one currency unit, consumption increases by currency units. If the propensity to consume is marginal , then consumption increases by € 0.85 with every increase in income of € 1.00:
The marginal propensity to consume is less than one, i.e. This means that if the income is increased by one euro, a share is spent on consumption. The rest is saved because of the saving function
By substituting (b) in (c) you get the marginal savings rate
or in other words:
In the example, the marginal propensity to save is .