International Journal of Social Science & Economic Research
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Title:
CAUSAL RELATION BETWEEN DOMESTIC SAVING AND ECONOMIC GROWTH: EVIDENCE FROM INDIAN ECONOMY

Authors:
Prof. Dhyani Mehta

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Prof. Dhyani Mehta
Assistant Professor, Institute of Management Nirma University.

MLA 8
Mehta, Prof. Dhyani. "CAUSAL RELATION BETWEEN DOMESTIC SAVING AND ECONOMIC GROWTH: EVIDENCE FROM INDIAN ECONOMY." Int. j. of Social Science and Economic Research, vol. 3, no. 8, Aug. 2018, pp. 4354-4366, ijsser.org/more2018.php?id=306. Accessed Aug. 2018.
APA
Mehta, P. (2018, August). CAUSAL RELATION BETWEEN DOMESTIC SAVING AND ECONOMIC GROWTH: EVIDENCE FROM INDIAN ECONOMY. Int. j. of Social Science and Economic Research, 3(8), 4354-4366. Retrieved from ijsser.org/more2018.php?id=306
Chicago
Mehta, Prof. Dhyani. "CAUSAL RELATION BETWEEN DOMESTIC SAVING AND ECONOMIC GROWTH: EVIDENCE FROM INDIAN ECONOMY." Int. j. of Social Science and Economic Research 3, no. 8 (August 2018), 4354-4366. Accessed August, 2018. ijsser.org/more2018.php?id=306.

References
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Abstract:
This study empirically investigates causal relationship and the direction of causality between domestic saving and economic growth in India. The variables used for study are Gross Domestic Savings and Gross Domestic Product (as proxy of economic growth). The methodology employed is econometric models for testing long run and short run causality using three different causality tests - Likelihood ratio test, Lagrange multiplier and Wald test. Augmented DickeyFuller (ADF) test shows that the variables are non-stationary at levels, but becomes stationary at first differences. Long run relationship among the variables is found in cointegration test. Causality tests find uni-directional causal relation between gross domestic savings to gross domestic product in short-run and bi-directional causality in long run. Results imply that policymakers should design and implement policies that boost savings, which in turn will boost economic growth. Increase in domestic savings will solve some of the problems for Indian industry like, over dependency on foreign investment and high cost of capital.