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Savings identity or the savings investment identity is a concept in economics stating that the amount saved (S) in an economy will be amount invested (I). The less broad US savings and investment Identity is simply that Governmental borrowing plus private investment MUST equal private savings plus foreign investment. The term "Identity" in economics means something that is a self evident fact. A change in any one of these categories must change one or more of the others.
Adam Smith notes this in The Wealth of Nations and it figures into the question of general equilibrium and the general glut controversy. In the general equilibrium model savings must equal investment for the economy to clear.
References
- Farrokh K. Langdana. Macroeconomic Policy: Demystifying Monetary and Fiscal Policy. (2002) ISBN 1402071469
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