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A Multivariate Analysis of the Nexus between Savings and Economic Growth in the ASEAN-5 Economies

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  • Chor Foon Tang

    (Chor Foon Tang is at the Department of Economics, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia, email: tcfoon@yahoo.com)

  • Kean Siang Ch’ng

Abstract

The savings–growth nexus is an age-old empirical problem, but the causal relationship between savings and economic growth remains controversial. Establishing a clear causal relationship has signifi cant policymaking implications for economic growth and development. Therefore, the purpose of this study is to re-visit empirically the savings–growth nexus for the fi ve ASEAN founding economies—ASEAN-5—via a multivariate framework. This study covered the annual data from 1970 to 2010. The Bartlett-corrected trace test for cointegration was adopted to examine the presence of a long-run relationship between savings and its determinants. The estimation results suggest that savings and its determinants are cointegrated in the fi ve ASEAN founding countries. urthermore, the bootstrapping approach was used to ascertain the causality direction between savings and economic growth. We found that savings Granger cause economic growth in all ASEAN-5 economies. Therefore, we believe that savings is a prominent source of economic JEL Classifications : C22, E21, O16

Suggested Citation

  • Chor Foon Tang & Kean Siang Ch’ng, 2012. "A Multivariate Analysis of the Nexus between Savings and Economic Growth in the ASEAN-5 Economies," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 6(3), pages 385-406, August.
    • Handle: RePEc:sae:mareco:v:6:y:2012:i:3:p:385-406
    DOI: 10.1177/097380101200600304
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    Cited by:

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    3. Chor Foon Tang & Eu Chye Tan, 2017. "Re-visiting the Savings-Led Growth Hypothesis and Its Stability in East Asian Economies," International Economic Journal, Taylor & Francis Journals, vol. 31(3), pages 436-447, July.

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    More about this item

    Keywords

    Bartlett-Corrected Trace Test; Cointegration; MWALD; Savings and Growth;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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