SAVINGS BEHAVIOR IN INDIA: CO-INTEGRATION AND CAUSALITY EVIDENCE

Pradeep Agrawal (), Pravakar Sahoo and Ranjan Kumar Dash
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Pradeep Agrawal: Reserve Bank of India (RBI) Endowment Unit, Institute of Economic Growth, Delhi University Enclave, Delhi 110007, India
Ranjan Kumar Dash: Reserve Bank of India (RBI) Endowment Unit, Institute of Economic Growth, Delhi University Enclave, Delhi 110007, India

The Singapore Economic Review (SER), 2010, vol. 55, issue 02, 273-295

Abstract: This study investigates the determinants of savings behavior in India and the direction of causality between savings and income per capita as these have important implications for development policy. We estimate long-run savings functions for India using modern co-integration procedures. Our empirical results show that higher income per capita and improved access to banking facilities significantly improves savings in India. On the other hand, foreign savings and public savings have negative impact on private and household savings. We also carry out an analysis of the direction of causality between savings and income. The results suggest that there is a one-way causation from income per capita to the savings rate.

Keywords: Savings; growth; India; causality; co-integration; E21; O16 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (7)

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DOI: 10.1142/S0217590810003717

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