Saving, Investment and Growth in India: Evidence from Cointegration and Causality Tests
Inder Sekhar Yadav (),
Phanindra Goyari () and
R. K. Mishra ()
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Inder Sekhar Yadav: Indian Institute of Technology, Kharagpur, India
Phanindra Goyari: School of Economics, University of Hyderabad, India
R. K. Mishra: Institute of Public Enterprise, Osmania University Campus, Hyderebad, India
Economic Alternatives, 2018, issue 1, 55-68
This study examines the long-run equilibrium relationship between real domestic saving, investment and growth and tests the null hypothesis of non-causality between these variables in India during 1951-2015. The cointegration tests confirmed the existence of a long-run equilibrium relationship between domestic savings, investment and growth for India. The estimated long-run elasticities suggested a stronger elasticity of saving in explaining the investment in India than growth. The ARDL short-run estimates were consistent with long-run estimates. The causality test suggested the absence of causal relationship between growth and investment, and between growth and saving. However, a unidirectional causality from saving to investment was confirmed suggesting that domestic savings play a very important role in supporting national investments.
Keywords: cointegration; Growth; Saving; Investment; Causality; DOLS; FMOLS; CUSUM (search for similar items in EconPapers)
JEL-codes: E21 E22 F43 C32 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:nwe:eajour:y:2018:i:1:p:55-68
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