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.

This is the national income identity:[1] where The national income identity can be rewritten as following:[2] 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: This identity implies that the difference of national savings and national investment is equal to current account.