Rate of savings which maximizes steady state level of the growth of consumption
In economics, the Golden Rule savings rate is the rate of savings which maximizes steady state level of the growth of consumption,[1] as for example in the Solow–Swan model. Although the concept can be found earlier in the work of John von Neumann and Maurice Allais, the term is generally attributed to Edmund Phelps who wrote in 1961 that the golden rule "do unto others as you would have them do unto you" could be applied inter-generationally inside the model to arrive at some form of "optimum", or put simply "do unto future generations as we hope previous generations did unto us."[2]
In the Solow growth model, a steady state savings rate of 100% implies that all income is going to investment capital for future production, implying a steady state consumption level of zero. A savings rate of 0% implies that no new investment capital is being created, so that the capital stock depreciates without replacement. This makes a steady state unsustainable except at zero output, which again implies a consumption level of zero. Somewhere in between is the "Golden Rule" level of savings, where the savings propensity is such that per-capita consumption is at its maximum possible constant value. Put another way, the golden-rule capital stock relates to the highest level of permanent consumption which can be sustained.
^Phelps, Edmund (1966). Golden rules of economic growth. New York: Norton.
^Origin of the term described at newschool.edu Archived 2016-03-04 at the Wayback Machine
and 26 Related for: Golden Rule savings rate information
In economics, the GoldenRulesavingsrate is the rate of savings which maximizes steady state level of the growth of consumption, as for example in the...
1960s on the sources of economic growth. His demonstration of the goldenrulesavingsrate, a concept related to work by John von Neumann, started a wave...
consume Marginal propensity to save Marginal propensity to consume GoldenRulesavingsrate Kinetic exchange models of markets Average Propensity To Save,...
ensure that the steady state level of saving corresponds to the GoldenRulesavingsrate of the Solow growth model and thus guarantee intertemporal efficiency...
Economist Edmund Phelps 1955, seminal work, natural rate of unemployment, GoldenRulesavingsrate Political Scientist Alan Schechter 1957 Scientist David...
exceed the cost of the work. By meeting this 'GoldenRule', consumers were able to receive energy savings without direct cost. Consumers then paid back...
a tax system, the tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed. The tax rate that is applied to an...
where Golden West held $32 billion in deposits and operated 123 branches. Golden West, which operated branches under the name World Savings Bank, was...
rules (the "GoldenRule" and the sustainable investment rule) began to bite,[vague][citation needed] the UK government desired to halve the real rate...
number of robots at work continued to increase, the global unemployment rate fell to 5%, the lowest in 38 years. Trends suggest that developments in artificial...
fix their exchange rates against each other, and then correct any imbalances that arise by rules based and negotiated exchange rate changes and other methods...
original Post Office Savings Bank was limited to deposits of £30 a year with a maximum balance of £150. Interest was paid at the rate of two and one-half...
rates. Interest, coupon, bonds, insurance, and dividends are generally withheld at a 21% rate, but are added to the savings base and taxed at savings...
day. When Mason discovers that his wife Jessie (Kobe) has lost all their savings through a bad tip about oil in the stock market, he steals the rest of...
1017/S0376892900011449. S2CID 145595791. Hamilton, K.; Clemens, M. (1999). "Genuine savingsrates in developing countries". World Bank Economic Review. 13 (2): 333–356...
from the original on 10 March 2015. Retrieved 10 March 2015. "'One-off savings' helped BBC hit cost-cutting targets". BBC News. BBC. 10 March 2015. Archived...
non-traditional exports, the rate is 15 percent while that for mining is 30 percent and 40 percent on bank profits above K250 million Reduced Rates and Suspension of...
would become modern-day Kazakhstan was ruled by the Golden Horde, also known as the Ulus of Jochi. During the Golden Horde period, a Turco-Mongol tradition...
independence initiatives will cost €6.3–7.8 billion in total and provide annual savings of €0.9–1.1 billion. After the decommissioning of the Ignalina Nuclear...
"Cajas", which are regional savings banks under the oversight of regional governments, and fed by the historically low interest rates and a massive growth of...
enough. Seeking to increase their income and thus savings, many started investing, pushing interest rates to the floor. Borrowing became so cheap that some...
Japanese Culture and Failures of SCAP Economic Reforms on High Rates of Personal Savings in Japan. MA Thesis, EALC, University of Kansas, 1996. Dower,...
income inequality, and a drop in aggregate demand. India's gross domestic savingsrate stood at 29.3% of GDP in 2022. In recent years, independent economists...
Global Information