results in the public (governmental) saving: The disposable income of the households is the income Y minus the taxes net of transfers: Disposable income can only be used for saving or for consumption: where the subscript P denotes the private sector. Therefore private saving in this model equals the disposable income of the households minus consumption: By this equation the private saving can be written as: and the national accounts as: Once this equation is used in Y=C+I+G+X-M we obtain By one transformation we get the determination of net exports and investment by private and public saving: By another transformation we get the sectoral balances of the economy as developed by Wynne Godley. This corresponds approximately to Balances Mechanics developed by Wolfgang Stützel: See also Balances Mechanics Government debt Inflation IS/LM model Sectoral balances References Macroeconomic aggregates Investment