<p>In simplistic national accounts terms $$Y=C+I+X-M$$ is an  expenditure identity while $$Y=C+S$$ is a use of income identity. </p>

<p>Implicitly this gives $$S-I=X-M$$ suggesting an excess of saving over investment in an open economy corresponds to a trade surplus in the current account, which in turn corresponds to an outflow in the financial account: the excess of savings over investment leads to an increase in overseas assets.</p>

<p>In a closed economy with no exports, imports or international financial flows, this forces $S=I$ and so no excess of saving over investment. Any production not used for consumption or normal investment has the effects either of increasing stocks (another form of investment) or of being valueless (so not counting towards income or saving).  </p>

CC BY-SA 3.0
2016-11-04T19:20:05.630Z
Would be good to define variables also. I assume $X =$ exports and $M =$ imports but could be clearer.
snoram
CC BY-SA 3.0
2016-11-04T23:09:03.060Z
They are fairly standard macroeconomics variables, but yes: $X$ is exports while $M$ is imports, $Y$ is GDP, $C$ is consumption (and here I have either implicitly included $G$ which would be government consumption or ignored it), while $S$ is saving and $I$ is investment
Henry
CC BY-SA 3.0
2016-11-04T18:12:13.910Z
2016-11-04T18:12:13.910Z
Henry
<p>I am confused that if investment is a type  of saving or a expenditure .if investment is a type of expenditure then is  saving is what is left after subtracting consumption and investment from income</p>

<investment><saving>
Is investment a type of saving or expenditure
Archana kumari
# Is investment a type of saving or expenditure

(Asked by: username_0 on 2016-11-04)

I am confused that if investment is a type of saving or a expenditure .if investment is a type of expenditure then is saving is what is left after subtracting consumption and investment from income

**Tags:** investment, saving

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## 1 answers

### Answer by username_1 on 2016-11-04. Score: 1

In simplistic national accounts terms $$Y=C+I+X-M$$ is an expenditure identity while $$Y=C+S$$ is a use of income identity.

Implicitly this gives $$S-I=X-M$$ suggesting an excess of saving over investment in an open economy corresponds to a trade surplus in the current account, which in turn corresponds to an outflow in the financial account: the excess of savings over investment leads to an increase in overseas assets.

In a closed economy with no exports, imports or international financial flows, this forces $S=I$ and so no excess of saving over investment. Any production not used for consumption or normal investment has the effects either of increasing stocks (another form of investment) or of being valueless (so not counting towards income or saving).

> **Comments:**
> **username_2**: Would be good to define variables also. I assume $X =$ exports and $M =$ imports but could be clearer.  
> **username_1**: They are fairly standard macroeconomics variables, but yes: $X$ is exports while $M$ is imports, $Y$ is GDP, $C$ is consumption (and here I have either implicitly included $G$ which would be government consumption or ignored it), while $S$ is saving and $I$ is investment  

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