The co-integration and causal relationship between saving and economic growth in India

The role of saving in promoting economic growth has received considerable attention all over the world. Saving is considered as real driving force behind the growth of an economy. The aim of this paper is to examine the casual relationship between economic growth and savings in India. To analyze thi...

Full description

Saved in:
Bibliographic Details
Published in:Theoretical and applied economics 2021-03, Vol.XXVIII (1), p.239-246
Main Authors: Dr. Tariq Ahmad BHAT, Tariq Ahmad LONE, Dr. Khursheed Hussain DAR
Format: Article
Language:English
Subjects:
casual relationship
economic growth
gdp
integration
saving
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The role of saving in promoting economic growth has received considerable attention all over the world. Saving is considered as real driving force behind the growth of an economy. The aim of this paper is to examine the casual relationship between economic growth and savings in India. To analyze this relationship time series data from 1960 to 2019 was used. To check the stationarity of data ADF and PP test were used. The Johansen co-integration test was employed to check the relationship between the variables. Finally Granger causality test was applied to see the direction of causality. The results have shown that all the variables are non stationary. The Johnson method shows that both the variables share the relationship with one another. The econometric evidence supports that savings do cause economic growth and economic growth in turn to savings. The bi-directional casual relationship was observed, which suggests that in India higher economic growth leads to higher savings and higher savings to more economic growth.
ISSN:1841-8678
1844-0029