Savings and Investment in India, 1970-2002: A Cointegration Approach
AbstractThe purpose of this paper is to investigate the relationship between savings and investment. The results reveal that there is unidirectional causality from savings to investment. From variance decomposition method, we observe that with a lag of three periods, change in savings effects 85% of variance in investment (and 92%) by the end of ten periods. On the other hand, no significant part of variance of yield curve is caused by inflation (3% and 4% at the end of three periods and ten periods, respectively). The results also showed cointegration between savings, investment and yield spread. Yield spread and investment have not been found to Granger-cause savings indicating savings are independent of investment and yield spread.
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Bibliographic InfoArticle provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.
Volume (Year): 5 (2005)
Issue (Month): 1 ()
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Web page: http://www.usc.es/economet/eaa.htm
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
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- AKA, Bédia F, 2007. "Relative Effects Of Public And Private Investment On Cote D’Ivoire’S Economic Performance," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(1).
- Verma, R. & Wilson, E.J., 2005. "A Multivariate Analysis of Savings, Investment, and Growth in India," Economics Working Papers wp05-24, School of Economics, University of Wollongong, NSW, Australia.
- Verma, R. & Wilson, E.J., 2005. "Savings, Investment, Foreign Inflows and Economic Growth of the Indian Economy 1950-2001," Economics Working Papers wp05-23, School of Economics, University of Wollongong, NSW, Australia.
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