On the Causality Between Saving and Growth: Long- and Short-Run Dynamics and Country Heterogeneity

Björn Andersson ()
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Björn Andersson: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 1999:18, Working Paper Series from Uppsala University, Department of Economics

Abstract: The temporal interdependence between saving and output has been in focus in a number of recent empirical studies. Results from these studies have compelled some authors to question the traditional notion of a causal chain where saving leads growth through capital accumulation. This paper contributes to this literature. As opposed to the previous studies, which have mainly utilised panel-estimation methods, the tests of causal chains here are carried out in time-series settings. Saving and GDP are estimated in bivariate vector autoregressive or vector error-correction models for Sweden, UK, and USA, and tests of Granger non-causality are performed within the estimated systems. The main results show that the causal chains linking saving and output differ across countries, and also that causality associated with adjustments to long-run relations might go in different directions than causality associated with short-term disturbances.

Keywords: Saving; growth; Granger-causality; cointegration; VAR; VECM (search for similar items in EconPapers)
JEL-codes: C32 E21 O40 O57 (search for similar items in EconPapers)
Pages: 29 pages
Date: 1999-10-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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