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As Keynesian model shows, the nation can benefit more by placing its focus on domestic activities than on borrowing from foreign countries. By producing government bonds that have high interest rates and, subsequently, by encouraging citizens to invest in the nation's benefit, the nation only helps itself by providing more technology and more opportunity that opens up more room for employment and hence opportunity to slip out of its recession when times are difficult economically. Capital and labor are the basic inputs for goods and services, and the resources for capital and labor comes from the savings of domestic homes and businesses,...
It is in this way that a nation can gain more from domestic savings than it can from borrowing from other countries.
The macroeconomics of National Savings are therefore very similar and closely related to the microeconomics of the individual family and business. They are merely practiced on a larger scale,
Sources
GAO. National Saving, 2001
http://www.gao.gov/new.items/d01591sp.pdf
Romer, D. (2011) Advanced macroeconomics (3rd ed.), McGraw Hill: U.K.
Nominal Interest rate (I)
Money demand curve
Money (M)
Sources
GAO. National Saving, 2001
http://www.gao.gov/new.items/d01591sp.pdf
Romer, D. (2011) Advanced macroeconomics (3rd ed.), McGraw Hill: U.K.
Nominal Interest rate (I)
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