Ex-Post Saving and Ex-Post Investment
Ex-post saving refers to the actual or realised saving in an economy during a year. Ex-post or actual saving is the sum total of planned saving and unplanned saving.
Ex-Post Saving = Planned Saving + Unplanned Saving
Ex-post investment refers to the actual or realised investment during a year. It represents actual values. Ex-post or actual investment is the sum total of planned investment and unplanned investment.
Ex-Post Investment = Planned Investment+ Unplanned Investment
It must be noted that ex-post saving and ex-post investment are equal at all levels of income. This equality between the two is brought by fluctuations in income.
Ex-Ante Saving and Ex-Ante Investment
Ex-ante saving refers to the amount of saving which households plan to save at different levels of income in the economy. The amount of ex-ante or planned saving is given by the saving function (or propensity to save).
Ex-ante investment refers to the amount of investment that firms plan to save at different levels of income in the economy. The amount of ex-ante or planned investment is determined by the relation between investment demand and rate of interest, i.e. by investment demand function. It represents estimated values.
In an economy, equilibrium occurs when Ex-Ante Saving = Ex-Ante Investment
Additional Notes:
Ex-ante: Planned or expected value of the variable
Ex-post: Actual or realised value of the variable
