Introduction
Fluctuations in consumption are an important cause of cyclical fluctuations in the economy, so the analysis of the theory of consumer demand helps to study macroeconomics laws in many ways. It allows you to determine the effect on national consumption, savings and investments, their relation to the national income.
The theory of consumer behavior was developed by George. M. Keynes. It has a leading position in the macroeconomic theory as an important tool of economic analysis.
The national consumption and national savings account for a total after-tax income of a population. A national consumption is the amount of money that is spent on the purchase of goods and services used to meet the material and spiritual needs of people. Savings is the part of income that is not consumed, it remains unused at the cost of current production and consumption needs, it is being accumulated.
Although savings and consumption are two related categories as components of income, however, there are qualitative differences between them. Firstly, consumption is focused on the satisfaction of current needs or the needs of the population. The savings are focused to increase the consumption in the future by reducing current consumption. Secondly, if there is a consumption in all families, the savings are made only to those families with incomes above the average. Third, the savings may be zero or may reach a significant value, i.e. the amplitude of oscillation is quite broad.
According to the so-called Keynesian fundamental psychological law, people tend to increase their consumption with income growth, but not to the same extent that the income is growing. For the characteristics of this process, marginal propensity to consume (MPC) and marginal propensity to save (MPS) are calculated. These figures give an idea of how much of of family income is to consume and how much is to save. The values of consumption and savings are relatively stable, provided that the state does not take special action to change them, for example, through including taxation.
National savings directly related to the investment. Consequently, the level of national savings is one of the main indicators of the state of the economy. Therefore, this topic is always relevant for research.
In this paper, we are given with the data set of 50 data values that cover 50 nations of the world. Each value represents the amount of gross national saving of a given country (as a percent of GDP). The purpose of this assignment is to determine descriptive statistics from this data and interpret it. The data will be illustrated using a stem-and-leaf plot and a box-and-whisker plot. Finally, we will select three states and determine their placement in the descriptive data.
Body
The descriptive statistics are calculated in Excel. The results are given in the table below:
Stem-and-leaf and box-and-whisker plots are developed in SPSS:
NationalSavings Stem-and-Leaf Plot
Frequency Stem & Leaf
6,00 25 . 333479
9,00 26 . 114555699
6,00 27 . 113588
5,00 28 . 00589
4,00 29 . 0035
3,00 30 . 229
8,00 31 . 00012247
1,00 32 . 1
2,00 33 . 79
,00 34 .
3,00 35 . 267
3,00 Extremes (>=47,4)
Stem width: 1,00
Each leaf: 1 case(s)
The average gross national savings among the 50 considered countries is 30.17% of their GDP with a standard deviation of 5.51%. The middle or the 50th% of the data is 28.85%. The most frequent value of the gross national savings in this data set is 31%. The bottom 25% of countries have their gross national savings below 26.68% and the top 25% of countries are with the savings above 31.18% of their GDP. Skewness and kurtosis value indicates that the data is not normally distributed. The distribution of the gross national savings is right-skewed.
The top three states are Qatar (51.4%), Singapore (47.4%) and China (47.4%). These three countries are indicated on the box plot as outliers. This means that the values are unusually high related to the other values in the data set.
Qatar is the leader in the ranking of national savings. The economy of Qatar is one of the most successful economies in the world. Such a high level of national savings may be due to the fact that Qatar has announced the creation of an independent investment fund, whose main goal is buying promising assets abroad. The new fund is called Doha Global Investment and its volume of available funds is approximately 12 billion dollars. Note that until now Qatar made investments all over the world through its sovereign wealth fund Qatar Investment Authority, which amount exceeds $ 100 billion. The source of these national savings is pointed out by a study conducted by Ernst & Young in collaboration with Oxford Economics Institute. Analysts have found that Qatar has topped the rating of the fastest growing markets on the basis of the previous ten years with an average annual GDP growth of 13 percent. Profit from the production and sale of hydrocarbons allowed Qatar to become a very rich country with a modern, well-developed economic infrastructure and the level of per capita income.
The next country we consider is Singapore with the 2nd place in the rating. In Singapore, the most part of financial development instruments was used (interest and credit management with gradual liberalization, nationalized financial institutions and tax incentives). These instruments were combined with the specific economic and social conditions. With exceptional geographical location and time zone (between Europe and America), Anglo-Saxon heritage, a nation of enterprising "immigrants", on the one hand, and lack of access to the large domestic market, natural resources, the small size of the economy on the other hand have identified the unique conditions and strategies of the “economic miracle” of Singapore. At its basis is the idea of Singapore's transformation into a major commercial, transport and financial center. In other words, the efficient use of the advantages of the country and transformation of its limitations into opportunities. The factors that strengthened the implementation of this “miracle” are a high level of savings, foreign capital and export production, for which the favorable conditions have been created (an open capital account, tax incentives, infrastructure; flexible "manual" management of the economy, prudent macroeconomic policies, rapid monetization).
The third country of interest is China with the 3rd place in our rating of national savings. Consumer spending in China now makes up only 36% of GDP, about half of the consumption level of the United States and Western Europe. This low level reflects the small share of household income in GDP and the high level of household savings. Reducing the share of income that Chinese households set aside in savings could also increase the level of consumer spending faster and easier. The high level of household savings in China is due to a number of factors, including the risk of loss of employment and the lack of reliable public pension. However, the first and foremost reason why Chinese households save up such a large proportion of its relatively low wages is to ensure that they had the means in case a family member require surgery or other hospital treatment and have to face high medical expenses. People are saving so much because insurance is so inadequate. The universal government health insurance system is in the initial stage, many people do not have an access to private health insurance. Thus, households accumulate large amounts of cash as a hedge against the possibility that these resources will be needed one day in-patient treatment.
