Forced saving
In economics, forced saving occurs when the spending of a person is less than their earnings due to the consumer goods shortages which can cause a hyperinflation. It can also happen when the available goods are too expensive, so that a person who has no access to credit has to accumulate the money for the purchase for a long time.[1]
Unlike saving money the forced saving is unvolunarily decreasing present consumtion whilst saving money is voluntarily lowering present consumtion for increase of consumtion in the future.
Examples
Example of the first mentioned situation could be forced savings of households caused by massive consumer goods shortages in Russia during 1991. Net forced saving ratio of hauseholds during year 1988 was estimated around more than 40%.
The other situation could be uprising costs of real estates and mortgages. Because of mortgage market regulations one does have to posses enough savings in order to apply for mortgage which leads to long term forced savings for many households amongst all Europe.
Forced saving ratio
We can define forced saving ratio which measures how much of household savings is composed by forced savings.
"net" forced saving ratio = (shortage effect + demand spillover effect)/savings rate
"gross" forced saving ratio = shortage effect/savings rate
Net forced savings ratio considers that informal economy role under shortage conditions.
References
- ^ Definition of forced savings at the Financial times lexicon
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