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Old Wine in New Bottles: Saving – Growth Nexus: Innovative Accounting Technique in Pakistan

Author

Listed:
  • Muhammad SHAHBAZ

    (COMSATS Institute of Information Technology)

  • Rana Ejaz Ali KHAN

    (The Islamia University of Bahawalpur, Pakistan)

Abstract

The paper re-investigates the relationship between economic growth and domestic savings by applying new approaches rather than old techniques. The cointegration and causality approaches have been applied for economic growth and domestic savings. In doing so, ARDL Bounds Testing, Johanson cointegration approaches are employed to examine for long run association while Innovative Accounting Techniques and Toda and Yamamoto (1995) for causal relationship has been applied. Ng-Perron de-trended test is used for order of integration of running actors. Results reveal that there exists a long run relationship between economic growth and domestic savings and their association is robust at least in long span of time. Causal results through innovative accounting technique assert that there is oneway causality running from economic growth to domestic savings while very weak from opposite side. Results by Toda and Yamamoto’s technique also confirm that economic growth leads domestic savings in Pakistan.

Suggested Citation

  • Muhammad SHAHBAZ & Rana Ejaz Ali KHAN, 2010. "Old Wine in New Bottles: Saving – Growth Nexus: Innovative Accounting Technique in Pakistan," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 7(7(548)), pages 49-60, July.
    • Handle: RePEc:agr:journl:v:7(548):y:2010:i:7(548):p:49-60
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    Citations

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    Cited by:

    1. Shahbaz, Muhammad & Shabbir, Shahbaz Muhammad & Butt, Muhammad Sabihuddin, 2011. "Effect of financial development on agricultural growth in Pakistan: new extensions from bounds test to level relationships and granger causality tests," MPRA Paper 34162, University Library of Munich, Germany, revised 16 Oct 2011.
    2. Mohammad Mafizur Rahman & Muhammad Shahbaz, 2013. "Do Imports and Foreign Capital Inflows Lead Economic Growth? Cointegration and Causality Analysis in Pakistan," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(1), pages 59-81, March.
    3. Muhammad Shahbaz & Faridul Islam & Naveed Aamir, 2012. "Is devaluation contractionary? Empirical evidence for Pakistan," Economic Change and Restructuring, Springer, vol. 45(4), pages 299-316, November.
    4. Muhammad SHAHBAZ & Smile DUBE, 2012. "Revisiting the Relationship between Coal Consumption and Economic Growth: Cointegration and Causality Analysis in Pakistan," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(1).
    5. Taguchi, Hiroyuki, 2021. "A revisit to effects of demographic dynamics on economic growth in Asia," MPRA Paper 110609, University Library of Munich, Germany.
    6. Tang, Chor Foon & Tan, Bee Wah, 2014. "A revalidation of the savings–growth nexus in Pakistan," Economic Modelling, Elsevier, vol. 36(C), pages 370-377.

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