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Causal Relationship Between Savings And Economic Growth In Countries With Different Income Levels

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  • Ramesh Mohan

    () (Bryant University)

Abstract

This paper addresses the relationship between domestic savings and economic growth for various economies with different income levels. Using time series annual data, the Granger causality test was conducted. The study seeks to determine whether the direction of causality in these economies is different based on their income class: namely low-income, low-middle income, upper-middle income, and high-income countries.

Suggested Citation

  • Ramesh Mohan, 2006. "Causal Relationship Between Savings And Economic Growth In Countries With Different Income Levels," Economics Bulletin, AccessEcon, vol. 5(3), pages 1-12.
  • Handle: RePEc:ebl:ecbull:eb-05e20002
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    File URL: http://www.accessecon.com/pubs/EB/2006/Volume5/EB-05E20002A.pdf
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    References listed on IDEAS

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    1. Jody Overland & Christopher D. Carroll & David N. Weil, 2000. "Saving and Growth with Habit Formation," American Economic Review, American Economic Association, pages 341-355.
    2. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    3. Zellner, Arnold, 1988. "Causality and causal laws in economics," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 7-21.
    4. Jody Overland & Christopher D. Carroll & David N. Weil, 2000. "Saving and Growth with Habit Formation," American Economic Review, American Economic Association, pages 341-355.
    5. Emmanuel Anoruo & Yusuf Ahmad, 2001. "Causal Relationship between Domestic Savings and Economic Growth: Evidence from Seven African Countries," African Development Review, African Development Bank, vol. 13(2), pages 238-249.
    6. Christiano, Lawrence J. & Ljungqvist, Lars, 1988. "Money does Granger-cause output in the bivariate money-output relation," Journal of Monetary Economics, Elsevier, vol. 22(2), pages 217-235, September.
    7. Krieckhaus, Jonathan, 2002. "Reconceptualizing the Developmental State: Public Savings and Economic Growth," World Development, Elsevier, vol. 30(10), pages 1697-1712, October.
    8. Orazio P. Attanasio & Lucio Picci & Antonello E. Scorcu, 2000. "Saving, Growth, and Investment: A Macroeconomic Analysis Using a Panel of Countries," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 182-211, May.
    9. Sinha, Dipendra & Sinha, Tapen, 1998. "Cart before the horse? The saving-growth nexus in Mexico," Economics Letters, Elsevier, vol. 61(1), pages 43-47, October.
    10. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    11. Sims, Christopher A, 1972. "Money, Income, and Causality," American Economic Review, American Economic Association, pages 540-552.
    12. Baharumshah, Ahmad Zubaidi & Thanoon, Marwan A. & Rashid, Salim, 2003. "Saving dynamics in the Asian countries," Journal of Asian Economics, Elsevier, pages 827-845.
    13. Bacha, Edmar L., 1990. "A three-gap model of foreign transfers and the GDP growth rate in developing countries," Journal of Development Economics, Elsevier, pages 279-296.
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    Citations

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    Cited by:

    1. Mohammad Reza Monjazeb & Marzieh Rashvand Sadeghi & Kobra Oladi, 2014. "Evaluation of the Effect of Liquidity Growth on Saving Rate in the Developing Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(7), pages 908-914, July.
    2. Abdelhafidh, Samir, 2013. "Potential financing sources of investment and economic growth in North African countries: A causality analysis," Journal of Policy Modeling, Elsevier, vol. 35(1), pages 150-169.
    3. Sachin N. Mehta & Gaurang D. Rami, 2014. "Nexus Between Savings, Investment And Economic Growth In India," Working papers 2014-12-12, Voice of Research.
    4. repec:sos:sosjrn:170208 is not listed on IDEAS
    5. Elena DRUICA & Rodica IANOLE & Viorel CORNESCU, 2014. "The psychological cost of saving – an agent-based modelling approach," Romanian Journal of Economics, Institute of National Economy, vol. 39(2(48)), pages 34-48, December.
    6. Tang, Chor Foon & Tan, Bee Wah, 2014. "A revalidation of the savings–growth nexus in Pakistan," Economic Modelling, Elsevier, vol. 36(C), pages 370-377.
    7. Abbas Ali Chandio & Feng Wei & Jiang Yuansheng, 2015. "Role of savings in economic growth of Pakistan," Asian Journal of Empirical Research, Asian Economic and Social Society, pages 243-251.
    8. Alexander Cotte Poveda, 2012. "Violence And Economic Development In Colombian Cities: A Dynamic Panel Data Analysis," Journal of International Development, John Wiley & Sons, Ltd., pages 809-827.
    9. Yilmaz BAYAR, 2014. "Savings, Foreign Direct Investment Inflows and Economic Growth in Emerging Asian Economies," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(8), pages 1106-1122, August.
    10. Alexander Cotte Poveda, 2013. "The relationship between development, investments, insecurity and social conditions in Colombia: a dynamic approach," Quality & Quantity: International Journal of Methodology, Springer, pages 2769-2783.

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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