IDEAS home Printed from https://ideas.repec.org/p/vor/issues/2014-12-12.html
   My bibliography  Save this paper

Nexus Between Savings, Investment And Economic Growth In India

Author

Listed:
  • Sachin N. Mehta
  • Gaurang D. Rami

Abstract

This paper examines the relationship between gross domestic product (GDP), gross domestic savings (GDS) and gross domestic investment (GDI) for India during the period 1951- 2012. Vector Error Correction Method and co-integration techniques are used for analyzing the relationship between gross domestic product (GDP), gross domestic savings (GDS) and gross domestic investment (GDI) in this study. The Johansen co-integration test indicates gross domestic product (GDP), gross domestic savings (GDS) and gross domestic investment (GDI) are co-integrated, and that a long-run equilibrium exists between them. The Vector Error Correction test reveals that there is unidirectional causality running from gross domestic savings (GDS) and gross domestic investment (GDI) to gross domestic product (GDP) in the short run as well as in the long run. It means gross domestic savings (GDS) and gross domestic investment (GDI) lead to gross domestic product (GDP) but gross domestic product (GDP) does not lead to gross domestic savings (GDS) and gross domestic investment (GDI). Key words: Economic Growth, Saving, Investment, Causality, Co-Integration. VECM

Suggested Citation

  • Sachin N. Mehta & Gaurang D. Rami, 2014. "Nexus Between Savings, Investment And Economic Growth In India," Working papers 2014-12-12, Voice of Research.
    • Handle: RePEc:vor:issues:2014-12-12
    as

    Download full text from publisher

    File URL: http://www.voiceofresearch.org/doc/Dec-2014/Dec-2014_12.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Pradeep Agrawal, 2001. "The relation between savings and growth: cointegration and causality evidence from Asia," Applied Economics, Taylor & Francis Journals, vol. 33(4), pages 499-513.
    3. Dipendra Sinha, 1996. "Saving and Economic Growth in India," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 49(4), pages 637-647.
    4. Singh, Prakash & Pandey, Manoj K., 2009. "Structural break, stability and demand for money in India," MPRA Paper 15425, University Library of Munich, Germany.
    5. Jangili, Ramesh, 2011. "Causal relationship between saving, investment and economic growth for India – what does the relation imply?," MPRA Paper 40002, University Library of Munich, Germany.
    6. Dipendra Sinha, 1996. "Saving and Economic Growth in India," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 49(4), pages 637-647.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hassan, Sallahuddin & Othman, Zalila & Mohaideen, Zalina Mohd, 2018. "The relationship between economic growth and employee provident fund: An empirical evidence from Malaysia," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 14(2), February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bagus Arya Wirapati & Niken Astria Sakina Kusumawardhani, 2010. "Is ACFTA A Proper Strategy Of Sustainable Poverty Alleviation?: Proof From The Depletion Of Saving Rate," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 13(1), pages 75-102, July.
    2. 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.
    3. Bagus Arya Wirapati & Niken Astria Sakina Kusumawardhani, 2010. "Apakah ACFTA Merupakan Strategi yang Tepat untuk Penuntasan Kemiskinan yang Berkesinambungan?: Bukti dari Penurunan Tingkat Simpanan," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 13(1), pages 75-102, July.
    4. Philippe Ferreira, 2012. "Déficits extérieurs et déclin de l'épargne intérieure sont des obstacles au financement du développement de l'Inde," Revue d'économie financière, Association d'économie financière, vol. 0(3), pages 115-136.
    5. 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.
    6. Rosby Leandra López L. & Juan Pablo Saldarriaga M., 2010. "Ahorro y crecimiento económico en Colombia: 1950-2007," Perfil de Coyuntura Económica, Universidad de Antioquia, CIE.
    7. Sinha, Dipendra & Sinha, Tapen, 2007. "Toda and Yamamoto Causality Tests Between Per Capita Saving and Per Capita GDP for India," MPRA Paper 2564, University Library of Munich, Germany.
    8. Segun Thompson Bolarinwa & Olufemi B. Obembe, 2017. "Empirical Analysis of the Nexus between Saving and Economic Growth in Selected African Countries (1981–2014)," Journal of Development Policy and Practice, , vol. 2(1), pages 110-129, January.
    9. Yaya KEHO, 2018. "Which comes first – savings or growth? Time series evidence from ECOWAS countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(615), S), pages 247-254, Summer.
    10. Dipendra Sinha & Tapen Sinha, 2008. "Relationships among household saving, public saving, corporate saving and economic growth in India," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(2), pages 181-186.
    11. Hassan, Sallahuddin & Othman, Zalila & Mohaideen, Zalina Mohd, 2018. "The relationship between economic growth and employee provident fund: An empirical evidence from Malaysia," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 14(2), February.
    12. 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, vol. 47(5), pages 2769-2783, August.
    13. 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.
    14. Verma, R. & Wilson, E.J., 2005. "Savings, Investment, Foreign Inflows and Economic Growth of the Indian Economy 1950-2001," Economics Working Papers wp05-23, School of Economics, University of Wollongong, NSW, Australia.
    15. Jangili, Ramesh, 2011. "Causal relationship between saving, investment and economic growth for India – what does the relation imply?," MPRA Paper 40002, University Library of Munich, Germany.
    16. 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.
    17. Piotr Misztal, 2011. "The Relationship Between Savings And Economic Growth In Countries With Different Level Of Economic Development," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 7(2), pages 17-29, August.
    18. Agrawal, Pradeep & Sahoo, Pravakar & Dash, Ranjan Kumar, 2009. "Savings behaviour in South Asia," Journal of Policy Modeling, Elsevier, vol. 31(2), pages 208-224.
    19. Soylu Özgür Bayram, 2019. "Do foreign direct investment and savings promote economic growth in Poland?," Economics and Business Review, Sciendo, vol. 5(4), pages 3-22, December.
    20. Dr. Tariq Ahmad BHAT & Tariq Ahmad LONE & Dr. Khursheed Hussain DAR, 2021. "The co-integration and causal relationship between saving and economic growth in India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(626), S), pages 239-246, Spring.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vor:issues:2014-12-12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Avdhesh Jha The email address of this maintainer does not seem to be valid anymore. Please ask Dr. Avdhesh Jha to update the entry or send us the correct address (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.