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Domestic Saving And Foreign Investment In Australia: A Granger Causality Test

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JORDAN SHAN
FIONA SUN
Abstract

This paper investigates the nature of the causal relationship between domestic saving and foreign investment in Australia using the Granger no-causality test procedure developed by Toda and Yamamoto (1995). The findings in the paper suggest that foreign investment has Granger-caused domestic saving in Australia but that no causality was found from saving to foreign investment. Therefore, the results reported in the paper reject the arguments by FitzGerald (1993) and support, indirectly, the Pitchford (1990) hypothesis in relation to the foreign debt debate in Australia and are consistent with the results of Layton and Makin (1993). [F21, F30]

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Article provided by Korean International Economic Association in its journal International Economic Journal.

Volume (Year): 12 (1998)
Issue (Month): 4 (December)
Pages: 79-87
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Handle: RePEc:taf:intecj:v:12:y:1998:i:4:p:79-87

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250. [Downloadable!] (restricted)
  2. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  3. Toda, Hiro Y, 1994. "Finite Sample Properties of Likelihood Ratio Tests for Cointegrating Ranks when Linear Trends are Present," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 66-79, February. [Downloadable!] (restricted)
  4. Milbourne, Ross & Otto, Glenn, 1992. "Consumption Smoothing and the Current Account," Australian Economic Papers, Blackwell Publishing, vol. 31(59), pages 369-84, December.
  5. Cumberworth, Matthew & Milbourne, Ross, 1996. "External Debt and Liabilities: Evidence from a Cross Section of Countries," The Economic Record, The Economic Society of Australia, vol. 72(218), pages 201-13, September.
  6. Zapata, Hector O & Rambaldi, Alicia N, 1997. "Monte Carlo Evidence on Cointegration and Causation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(2), pages 285-98, May.
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  7. Tony Makin, 1994. "Open economy measures of wealth and Hicksian national income," Open Economies Review, Springer, vol. 5(4), pages 361-369, October. [Downloadable!] (restricted)
  8. J. D. Pitchford, 1989. "A Sceptical View of Australia's Current Account and Debt Problem," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 22(2), pages 5-14. [Downloadable!] (restricted)
  9. Philip M. Bodman, 1995. "National Savings And Domestic Investment In The Long Term: Some Time Series Evidence From The Oecd," International Economic Journal, Korean International Economic Association, vol. 9(2), pages 37-60, June. [Downloadable!] (restricted)
  10. Bodman, Philip M, 1996. "On Export-Led Growth in Australia and Canada: Cointegration, Causality and Structural Stability," Australian Economic Papers, Blackwell Publishing, vol. 35(67), pages 282-99, December.
  11. Allan P. Layton & Tony Makin, 1993. "Estimates Of The Macroeconomic Impact Of Foreign Investment In Australia," International Economic Journal, Korean International Economic Association, vol. 7(4), pages 35-42, December. [Downloadable!] (restricted)
  12. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hway-Boon Ong, Chin-Hong Puah, Muzafar Shah Habibullah, 2006. "Interdependence of ASEAN Business Cycles," Frontiers in Finance and Economics, Lille Graduate School of Management, vol. 3(1), pages 69-78, June. [Downloadable!]
  2. Eric J. Pentecost & Carlyn Ramlogan, 2000. "The Savings Ration And Financial Repression In Trinidad And Tobago ," International Economic Journal, Korean International Economic Association, vol. 14(2), pages 67-84, June. [Downloadable!] (restricted)
  3. Jr-Tsung Huang, 2007. "Labor force participation and juvenile delinquency in Taiwan: a time series analysis," Journal of Family and Economic Issues, Springer, vol. 28(1), pages 137-150, March. [Downloadable!] (restricted)
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