<p>The two equations are essentially identical, <strong>but I believe two of the terms are around the wrong way</strong>.</p>
<p>The expression after the first equality is trying to break net private savings and the net public deficit into its constituent parts.</p>
<p>Net private savings should be = <em>private investment and savings</em> - <em>private consumption</em></p>
<p>Net public deficit is =  <em>Taxes</em> - <em>Government Expenses</em></p>
<p>In the top equation, <em>Private Consumption</em> and <em>Private investments and savings</em> need to be swapped around. Then the equality should hold.</p>
<p>Noting that net public deficit is negative if there is a deficit and positive if there is a surplus.</p>

CC BY-SA 4.0
2024-07-30T17:14:47.860Z
Thanks for your reply. There is still a point unclear to me. As far as I know Net private savings should be equal to S - I that is the remaining savings after deducting investment while in the equation you define it as S + I - C. Could you clarify this point?
user279687
CC BY-SA 4.0
2024-07-30T18:08:10.493Z
Given they have grouped private investments and savings together I interpreted investments as say buying bonds or a long term deposit which is another form of saving essentially!
Rob_research
CC BY-SA 4.0
2024-07-30T20:29:09.237Z
This would imply that you define net private savings as (S + I) - C wirh (S+ I) some sort of "broad" definition of savings (savings + bonds and long term deposit) while in the literature i've found a different definition, that is net privare savings = S - I with no reference to consumption. Still, what is the right definition of net private savings?
user279687
CC BY-SA 4.0
2024-07-30T12:39:58.743Z
2024-07-30T12:39:58.743Z
Rob_research
<p>I have found the following equations:</p>
<p>Exports - Imports = Private Consumption - Private investments and savings + Taxes - Government Expenses = Net private savings + Net public deficit.</p>
<p>While I could understand the equation:</p>
<p>Exports - Imports = Net private savings + Net public deficit</p>
<p>I don't understand how the first equality sign could hold.
Could someone explain it?
Many thanks in advance</p>

<macroeconomics>
Net exports equation
user279687
# Net exports equation

(Asked by: username_0 on 2024-07-30)

I have found the following equations:

Exports - Imports = Private Consumption - Private investments and savings + Taxes - Government Expenses = Net private savings + Net public deficit.

While I could understand the equation:

Exports - Imports = Net private savings + Net public deficit

I don't understand how the first equality sign could hold.
Could someone explain it?
Many thanks in advance

**Tags:** macroeconomics


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## 1 answers

### Answer by username_1 on 2024-07-30. Score: 0

The two equations are essentially identical, **but I believe two of the terms are around the wrong way**.

The expression after the first equality is trying to break net private savings and the net public deficit into its constituent parts.

Net private savings should be = *private investment and savings* - *private consumption*

Net public deficit is = *Taxes* - *Government Expenses*

In the top equation, *Private Consumption* and *Private investments and savings* need to be swapped around. Then the equality should hold.

Noting that net public deficit is negative if there is a deficit and positive if there is a surplus.

> **Comments:**
> **username_0**: Thanks for your reply. There is still a point unclear to me. As far as I know Net private savings should be equal to S - I that is the remaining savings after deducting investment while in the equation you define it as S + I - C. Could you clarify this point?  
> **username_1**: Given they have grouped private investments and savings together I interpreted investments as say buying bonds or a long term deposit which is another form of saving essentially!  
> **username_0**: This would imply that you define net private savings as (S + I) - C wirh (S+ I) some sort of "broad" definition of savings (savings + bonds and long term deposit) while in the literature i've found a different definition, that is net privare savings = S - I with no reference to consumption. Still, what is the right definition of net private savings?  

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