The Determinants Of Savings: Empirical Evidence From Pakistan.

Author(s)

Abdur Rahman Aleemi , Shuaib Ahmed , Muhammad Tariq ,

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Volume 4 - January 2015 (01)

Abstract

Economic theory suggests that national savings is an important component of growth in every economy. In developing countries like Pakistan that is performing well in terms of growth, one cannot rule out the fact that savings has got a role to play. The most significant economic relation between present, past and future of any country is described by its savings. The aim of this study was to analyze the impact and relationship between national saving rate and some selected determinants of saving namely inflation, real interest rate, real GDP growth rate and Government current expenditure, by using annual data for the period of 1980-2010. The variables in our model are based on well-established economic theory and long standing relationship. Supplemented in a dynamic regression model with the ARMA specification and well specified model; it was found that inflation, interest rate and government expenditures are negatively affecting the national savings rate during the length of this study for the economy of Pakistan.

Keywords

National Savings, Government Expenditures, Real Interest Rate, ARMA

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