From Population Age Structure and Savings Rate to Economic Growth: Evidence from Ecuador

Joel Rosado-Anastacio and Mar a Isabel Alvarado S Nchez
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Mar a Isabel Alvarado S Nchez: Faculty of Social Sciences and Humanities, Escuela Superior Polit cnica del Litoral, Campus Gustavo Galindo Km 30.5 V a, Perimetral, Guayaquil, Ecuador.

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 3, 352-361

Abstract: This paper studied the relationship between the dependency ratio (DR), savings rate (SR) and real gross domestic product (GDP) for Ecuador for the period 1975-2015. Starting with the unit root tests given the use of time series and the cointegration results, the dynamic ordinary least squares and fully modified ordinary least squares (FMOLS) were used to show the relationship between the variables in the long-run. In the short-run, vector error correction model was applied to estimate the relationship. In several degrees, the long-run relationship between the DR, SR and real GDP was proved; Granger causality tests show a one-way causality running from the SR to GDP per capita. The interaction between the variables in the post-sample period is also forecast using impulse response functions and variance decomposition analysis. The overall result implies that changes in population age structure had a significant impact on real GDP per capita in Ecuador. However, this advantage of the age structure may disappear soon due to the projected rapid increase in the DR because of ageing of the population which may lead to a slowdown in the GDP growth.

Keywords: Cointegration; Dependency Ratio; Gross Domestic Product; Impulse Response Functions; Savings Rate; Structural Breaks; Variance Decomposition (search for similar items in EconPapers)
JEL-codes: J11 J14 O11 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2017-03-46

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