The Causal Relation Between Savings and Economic Growth in Turkey

Özcan Karahan ()
Additional contact information
Özcan Karahan: Bandırma Onyedi Eylül University

A chapter in The Political Economy of Development in Southeastern Europe, 2018, pp 127-139 from Springer

Abstract: Abstract There is plentiful evidence in the literature suggesting a positive causality relationship between savings and national income. Nevertheless, the views on the direction of the causality relationship between savings and economic growth are rather controversial. The Solow model-based view supports to the hypothesis of “income-driven growth” and hence asserts that the causality relation operates from national savings to income. Savings play a major role in providing national capacity for investment and thus lead to the higher economic growth. On the other hand, the Keynesian model-based view, by advocating “income-led savings growth”, claims that causality operates from national income to savings. Namely, savings, as the non-consumed part of the income, are affected by changes in the level of income rather than determining the level of income. Therefore, there is no opportunity to influence the economic growth rate by implementing the policies aiming to increase the rate of savings. This study aims to investigate the validity of the views related to the Solow and Keynesian-based models for the Turkish economy by using Johansen cointegration analysis and Granger causality test. Thus, empirical results also show whether policies that encourage savings would be effective in order to accelerate economic growth in Turkey.

Keywords: Savings; Economic policy; Growth; Turkey (search for similar items in EconPapers)
JEL-codes: E21 E61 O40 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-319-93452-5_8

Ordering information: This item can be ordered from
http://www.springer.com/9783319934525

DOI: 10.1007/978-3-319-93452-5_8

Access Statistics for this chapter

More chapters in Contributions to Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().