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Domestic Saving-Investment Correlation Puzzle Revisited: A Time Series Analysis for South Africa

Author

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  • Rajarshi Mitra

    (National Research University Higher School of Economics)

Abstract

The correlation between domestic saving and investment rates and its implications for international capital flows is well documented. This paper re-examines the short-run and long-run domestic saving-investment correlation in South Africa. The period of study is 1960-2014. Domestic saving rate is found to have significantly positive long-run effect on domestic investment rate. Granger causality indicates short-run bidirectional causality between domestic saving and investment rates. Domestic saving policies could, therefore, be expected to significantly increase domestic investment in South Africa.

Suggested Citation

  • Rajarshi Mitra, 2017. "Domestic Saving-Investment Correlation Puzzle Revisited: A Time Series Analysis for South Africa," Economics Bulletin, AccessEcon, vol. 37(2), pages 1217-1225.
    • Handle: RePEc:ebl:ecbull:eb-17-00186
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    References listed on IDEAS

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    More about this item

    Keywords

    Cointegration; Investment; Savings; VECM.;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • F1 - International Economics - - Trade

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