A NOTE ON MR MEADES RELATION AND INTERNATIONAL CAPITAL MOVEMENTS

James Meade (1993) described how in 1931 he used process analysis to p rove the fundamental Keynesian relation that investment causes saving. This note uses more general versions of process analysis to demonstra te that the structure of the underlying processes creates 'Mr Meade's Relation', not the mathematical assumption of a fixed marginal propens ity to save nor the heuristic assumption of a closed economy. The proc esses create a 'conservation of saving' principle, and the multiplier operates until all saving is voluntarily held. The final section highl ights the ongoing importance of process analysis and this relation for macroeconomic methods and policy.