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Saving, Investment and Growth: A Causality Test

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  • Zangeneh, Hamid

Abstract

All 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.

Suggested Citation

  • Zangeneh, Hamid, 2006. "Saving, Investment and Growth: A Causality Test," MPRA Paper 26806, University Library of Munich, Germany, revised 2006.
    • Handle: RePEc:pra:mprapa:26806
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    References listed on IDEAS

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    1. Deepak Lal, 1993. "Poverty and Development," UCLA Economics Working Papers 707, UCLA Department of Economics.
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    Cited by:

    1. Zangeneh, Hamid, 2010. "Iran: Past, Present and the Future," MPRA Paper 26283, University Library of Munich, Germany.

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    More about this item

    Keywords

    Granger causalities; Iranian saving and investment and economic growth;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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