Analyzing the Savings-Investment Trend in a Panel of G-7 Countries
Baserat Sultana and
Additional contact information
Abdul Mansoor: Department of Economics, University of Wah Pakistan
Baserat Sultana: Department of Economics, University of Wah Pakistan
Romana Saeed: Department of Economics, University of Wah Pakistan
Asian Journal of Economics and Empirical Research, 2018, vol. 5, issue 2, 147-154
This study examined the relationship between savings and investment in the G-7 countries for the period of 1970 to 2015. The stationary analysis of the data has been done by adopting the panel Levin, Lin & Chu, Breitung, Pesaran & Shin, ADF-Fisher & PP-Fisher criteria while the long run relationship has been tested by employing the Pedroni residual test of co-integration. The results neglected the existence of a long run correlation between saving and investment in G-7 countries. Further, joint causality between the savings and investment has also been tested using the fixed effect VAR model. Wald test explains that the two consecutive lags i.e. S (-1) and S (-2) of savings is jointly causing savings in the current year in the G7 countries. While the same two lags of investment i.e. I (-1) and I (-2) does not jointly granger cause savings in the G7 economies. The results are in line with Feldstein and Horioka (1980) that there is a stable and significant association between the increasing rates of savings and investment in the short run while this relationship weaken in the long run.
Keywords: Savings; Investment; Panel co-integration; Panel VAR; G-7 countries. (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:aoj:ajeaer:2018:p:147-154
Access Statistics for this article
Asian Journal of Economics and Empirical Research is currently edited by Sara Lim
More articles in Asian Journal of Economics and Empirical Research from Asian Online Journal Publishing Group 2885 Sanford Ave SW #43110 Grandville, MI 49418, USA.
Bibliographic data for series maintained by Sara Lim ().