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Domestic Saving Under the Perspective of Interest Rate, unemployment and inflation in Pakistan: A Time Series Analysis

Author

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  • Aramish Altaf Alvi

    (Department of Economics, University of the Punjab, Lahore, Pakistan)

  • Arooj Fatima

    (Department of Economics, University of the Punjab, Lahore, Pakistan)

Abstract

Domestic savings play a pivotal role in the process of economic growth as saving increases the amount of physical capital. Pakistan has issue of low aggregate saving for attaining and maintaining economic growth. This study has examined the impact of interest rate, unemployment rate, inflation rate and worker remittances on domestic savings in Pakistan. For examining the stationarity of the variables Augmented Dickey-Fuller unit root test is used. Maximum 2 lag are selected by following different lag selection criteria. Autoregressive Distributed Lag model is used for examining the cointegration among the variables of the model. On the basis of estimated results, it is concluded that interest rate, inflation rate, unemployment rate and worker remittances are playing important role in determining domestic savings in Pakistan. The government of Pakistan has been trying to increase overall rate of saving and for this purpose it introduces many schemes. But government is unable to get required results in this concerns because of low incomes, unemployment and improper implementation of the socio-economic policies. This study has tried to contribute in literature as existing literature hardly did this type of exercise.

Suggested Citation

  • Aramish Altaf Alvi & Arooj Fatima, 2017. "Domestic Saving Under the Perspective of Interest Rate, unemployment and inflation in Pakistan: A Time Series Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 6(1), pages 15-27, March.
    • Handle: RePEc:rfh:bbejor:v:6:y:2017:i:1:p:15-27
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    References listed on IDEAS

    as
    1. Mohsin Hasnain Ahmad & Zeshan Atiq & Shaista Alam & Muhammad S. Butt, 2006. "The impact of demography, growth and public policy on household saving: a case study of Pakistan," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 13(2), pages 57-71, December.
    2. Aasim M. Husain, 1996. "Private Saving and Its Determinants: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(1), pages 49-70.
    3. Arshad, Sumera & Ali, Amjad, 2016. "Trade-off between Inflation, Interest and Unemployment Rate of Pakistan: Revisited," MPRA Paper 78101, University Library of Munich, Germany.
    4. Tasnim Khan & Abid Rashid Gill & Sobia Haneef, 2013. "Determinants of Private Saving: A Case of Pakistan," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 1(1), pages 1-7.
    5. Sumera Arshad & Amajd Ali, 2016. "Trade-off between Inflation, Interest and Unemployment Rate of Pakistan: Revisited," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 5(4), pages 193-209, December.
    6. Fawad AHMAD, 2015. "Determinants of Savings Behavior in Pakistan: Long Term- Short Term Association and Causality," Timisoara Journal of Economics and Business, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 8(1), pages 103-136, June.
    7. Tasnim Khan & Abid Rashid Gill & Sobia Haneef, 2013. "Determinants of Private Saving: A Case of Pakistan," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 1(1), pages 1-7, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Domestic saving; Inflation; Unemployment; Remittances; Interest Rate;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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