Saving-investment balance
# Saving-investment balance

In economics, saving-investment balance or I-S balance is a balance of national savings and national investment, which is equal to current account. This relationship is obtained from the national income identity.

## Description

This is the national income identity:

    $Y=C+I+G+(EX-IM)$

where

* Y: GDP,
* C: national consumption,
* I: national investment,
* G: government spending,
* EX: export,
* IM: import,
* EX－IM: current account.

The national income identity can be rewritten as following:

    $(Y-T-C)+(T-G)-I=EX-IM$

where T is defined as tax. (Y-T-C) is savings of private sector and (T-G) is savings of government. Here, we define S as National savings (= savings of private sector + savings of government) and rewrite the identity as following:

    $S-I=EX-IM$

This identity implies that the difference of national savings and national investment is equal to current account.

