Saving, Investment and Growth: A Causality Test
AbstractAll agree to the answer, i.e., they agree that accumulation of capital was, is, and will remain the most significant problem of the third world (the south) countries. The third world countries cannot accumulate capital because of low-income levels, which in turn, leads to low saving and investments. But low saving and hence low investments are responsible for low income. A catch 22 problem for the third world countries that is badly in need of solutions. This paper shows that we could conclude a one-way Granger causalities running from savings to investment, and from disposable income to investment. This is true with one or more lagged values as independent variable. This means, we need undertake policies that foster savings to spur investment, and as a result, capital accumulation.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 26806.
Date of creation: 2006
Date of revision: 2006
Publication status: Published in Iranian Economic review 16.11(2006): pp. 165-175
Granger causalities; Iranian saving and investment and economic growth;
Find related papers by JEL classification:
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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