THE RELATIONSHIP BETWEEN SAVING AND GROWTH IN SOUTH AFRICA: A TIME SERIES ANALYSIS

Aylit Tina Romm

South African Journal of Economics, 2005, vol. 73, issue 2, 171-189

Abstract: This paper uses the Johansen VECM estimation technique to examine the directions of association between saving and growth in South Africa over the period 1946–1992. We examine the aggregate private saving rate and its interaction with investment and growth. The paper finds that the private saving rate has a direct, as well as, an indirect effect on growth. The indirect effect is through the private investment rate. In turn, we find that growth has a positive effect on the private saving rate. The extent of this effect is determined by liquidity constraints. Thus, we have a virtuous cycle, as growth enhances saving, which in turn further enhances growth.

Date: 2005
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https://doi.org/10.1111/j.1813-6982.2005.00012.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:sajeco:v:73:y:2005:i:2:p:171-189

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