The Relationship between National Saving and Economic Growth in Ethiopia: ARDL and Granger causality Approaches
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2016-06
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Abstract
Achieving a high and stable economic growth rate is an important issue for every country as economic growth is crucial for economic development. The objective of the paper is to investigate relationship between savings and economic growth in Ethiopia. The study analyzes the long-run causality between national saving and economic growth in Ethiopia‟s economy. Annual data for the period 1975-2013 is used; an Autoregressive Distributed Lag Model and Granger causality are attributed for the empirical results. The results of the study show that there is a negative and insignificant impact of savings on economic growth. In addition Granger causality test showed that there is a unidirectional causality from gross national product to national savings.
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Economic Growth; National Saving; Autoregressive Distributed Lag Model; Granger Causality Ethiopia