The present study examines the inter- relationship between economic growth, saving rate and inflation for south-east and south Asia in a simultaneous equation framework using two stage least squares with panel data. The relationship between saving rate and growth has been found to be bi-directional and positive. Inflation has a highly significant negative effect on growth but positive effect on saving rate. Inflation is not affected by growth but is largely determined by its past values, and saving rate is not affected by interest rate. These findings for countries in Asia with widely divergent values of aggregates are very relevant for development policies and strategies.
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Paper provided by Indian Institute of Management Ahmedabad, Research and Publication Department in its series IIMA Working Papers with number
2008-07-01.
Find related papers by JEL classification: C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
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