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The Relationship Between Saving And Growth In South Africa: A Time Series Analysis

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  • AYLIT TINA ROMM

Abstract

This paper uses the Johansen VECM estimation technique to examine the directions of association between saving and growth in South Africa over the period 1946–1992. We examine the aggregate private saving rate and its interaction with investment and growth. The paper finds that the private saving rate has a direct, as well as, an indirect effect on growth. The indirect effect is through the private investment rate. In turn, we find that growth has a positive effect on the private saving rate. The extent of this effect is determined by liquidity constraints. Thus, we have a virtuous cycle, as growth enhances saving, which in turn further enhances growth.

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  • Aylit Tina Romm, 2005. "The Relationship Between Saving And Growth In South Africa: A Time Series Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 73(2), pages 171-189, June.
    • Handle: RePEc:bla:sajeco:v:73:y:2005:i:2:p:171-189
    DOI: 10.1111/j.1813-6982.2005.00012.x
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    Cited by:

    1. Sudan K. Oli, 2018. "Impact of Microfinance Institutions on Economic Growth of Nepal," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 6(2), pages 98-109, June.
    2. Kevin S. Nell & Maria M. De Mello, 2019. "The interdependence between the saving rate and technology across regimes: evidence from South Africa," Empirical Economics, Springer, vol. 56(1), pages 269-300, January.
    3. BONGA-BONGA, Lumengo & GUMA, Nomvuyo, 2017. "The Relationship Between Savings And Economic Growth At The Disaggregated Level," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 70(1), pages 1-24.
    4. Fedderke, J.W. & Romm, A.T., 2006. "Growth impact and determinants of foreign direct investment into South Africa, 1956-2003," Economic Modelling, Elsevier, vol. 23(5), pages 738-760, September.
    5. Taguchi, Hiroyuki, 2021. "A revisit to effects of demographic dynamics on economic growth in Asia," MPRA Paper 110609, University Library of Munich, Germany.
    6. Yaya KEHO, 2018. "Which comes first – savings or growth? Time series evidence from ECOWAS countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(615), S), pages 247-254, Summer.
    7. Soylu Özgür Bayram, 2019. "Do foreign direct investment and savings promote economic growth in Poland?," Economics and Business Review, Sciendo, vol. 5(4), pages 3-22, December.

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