THE DEVELOPMENT OF THE FLOW OF INSTITUTIONAL SAVINGS IN THE ANALYSIS OF TREASURY BORROWING PROBLEMS.

The article surveys the development of flow-of-funds methodology for analyzing borrowing problems confronted by the U.S. Treasury Department. Research into the subject was prompted by the substantial financing needs of World War II. By early 1942 individuals from various government agencies were exploring the relationships between savings, investment, consumption, and other key variables. Older metrics such as "national income" were found lacking, and new measures were created. It was seen that, for certain purposes, gross income flow was a more appropriate statistic than gross national product. From gross income flow came disequilibrium analysis. Since World War II, flow-of-funds methods have continued to be used, albeit in streamlined form.