Factors That Shift the Desired Saving Curve

The IS curve

Loanable funds market
     equilibrium

Real interest rate, r

Desired national saving, S,
and desired investment, I

Output, Y

Real interest rate, r

Levels of output, Y

Shifts in the IS Curve

Shifts in IS curve

Factors that shift the IS curve via changing
the desired savings include:

1. Change in expected future output
2. Change in wealth
3. Change in government purchase, G
4. Change in taxes, T
5. Change in expected future marginal
    product of capital, E[MPK]
6. Change in effective tax rate on capital

k = -0.05 (slider from -1 to 1, step 0.05)
e = 4000 (slider from 4000 to 7000, step 10)
A = Intersect(xAxis, yAxis)
B = Point(yAxis)
a = Segment(A, B)
C = Point(xAxis)
b = Segment(A, C)
D = Point(xAxis)
E = Point(xAxis)
c = Segment(D, E)
F = (7, 7)
d = Segment(D, F)
f = If(0.5 < x < 5.5, 5 - x^(0.75))
t: (e - 4000) / 1000
g = If(1 + k + (e - 4000) / 1000 < x < 3 + k + (e - 4000) / 1000, (x - k - (e - 4000) / 1000)^(1.5))
H = Intersect(f, g, (2.1363931964841747, 3.2329009651027))
I = Intersect(f, g, (2.1363931964841747, 3.2329009651027))
J: (8 + t, y(H))
K: (0, y(H))
L: (7, y(H))
h = Segment(K, J)
M: (x(J), 0)
i = Segment(M, J)
text3: "Y=" + e + ""
n: (y(H) - 1.098) / 0.264
text4: "" + n + "%"
text5: "" + n + "%"
text1: "Savings curve, S when (Y=" + e + ")"
N: (x(H), 0)
j = Segment(H, N)
text11: "(" + e + "," + n + "%)"
G: (2.9 + t + k, g(2.9 + t + k))