Domestic Saving-Investment Correlation Puzzle Revisited: A Time Series Analysis for South Africa

Rajarshi Mitra ()
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Rajarshi Mitra: National Research University Higher School of Economics

Economics Bulletin, 2017, vol. 37, issue 2, 1217-1225

Abstract: The correlation between domestic saving and investment rates and its implications for international capital flows is well documented. This paper re-examines the short-run and long-run domestic saving-investment correlation in South Africa. The period of study is 1960-2014. Domestic saving rate is found to have significantly positive long-run effect on domestic investment rate. Granger causality indicates short-run bidirectional causality between domestic saving and investment rates. Domestic saving policies could, therefore, be expected to significantly increase domestic investment in South Africa.

Keywords: Cointegration; Investment; Savings; VECM. (search for similar items in EconPapers)
JEL-codes: F1 O1 (search for similar items in EconPapers)
Date: 2017-06-05
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