The savings and growth nexus in Bangladesh

The paper investigates the causal relationship between Bangladesh’s gross domestic savings (GDS) and gross domestic product (GDP) in the years 1980 to 2018. Using yearly time series data from the period, the authors employ one long-run and two short-run causality tests to identify the direction of c...

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Autors principals:	Rahman, Dr. Sultan Hafeez, Hafeez, Dr. Sultan
Format:	Working Paper
Idioma:	English
Publicat:	BIGD 2024
Matèries:	Bangladesh JEL classification Granger causality Growth Savings VECM
Accés en línia:	http://hdl.handle.net/10361/23791

id	10361-23791
record_format	dspace
spelling	10361-237912024-08-19T21:04:10Z The savings and growth nexus in Bangladesh Rahman, Dr. Sultan Hafeez Hafeez, Dr. Sultan Bangladesh JEL classification Granger causality Growth Savings VECM The paper investigates the causal relationship between Bangladesh’s gross domestic savings (GDS) and gross domestic product (GDP) in the years 1980 to 2018. Using yearly time series data from the period, the authors employ one long-run and two short-run causality tests to identify the direction of causality between the two variables. Bangladesh experienced stellar GDP growth between 1990 and 2019, averaging 6.5 percent per year. In the latter years, this rate was over 7 percent per year. Despite that, its GDS rate only increased to 22 percent from 15 percent in the same period. This is in stark contrast to the scenario in countries like India, China, Indonesia, and Thailand. The Philippines, however, had a low savings rate like Bangladesh. A common feature of both countries is their large remittances and the broad-based growth effects in the economies. In both Bangladesh and the Philippines, gross national savings (GNS) rather than GDS caused greater investment. Thus, domestic savings were clearly not the key driver of growth in Bangladesh, which is inconsistent with the view of capital fundamentalists and neoclassical growth theory. The findings suggest that, in the short run, the direction of causality between savings and economic growth is unidirectional from economic growth to savings. And in the long run, there is no evidence of statistically significant causality in either direction. In other words, higher economic growth induced savings in Bangladesh in the studied period of time. 2024-08-19T05:50:41Z 2024-08-19T05:50:41Z 2021-09 Working Paper http://hdl.handle.net/10361/23791 en application/pdf BIGD
institution	Brac University
collection	Institutional Repository
language	English
topic	Bangladesh JEL classification Granger causality Growth Savings VECM
spellingShingle	Bangladesh JEL classification Granger causality Growth Savings VECM Rahman, Dr. Sultan Hafeez Hafeez, Dr. Sultan The savings and growth nexus in Bangladesh
description	The paper investigates the causal relationship between Bangladesh’s gross domestic savings (GDS) and gross domestic product (GDP) in the years 1980 to 2018. Using yearly time series data from the period, the authors employ one long-run and two short-run causality tests to identify the direction of causality between the two variables. Bangladesh experienced stellar GDP growth between 1990 and 2019, averaging 6.5 percent per year. In the latter years, this rate was over 7 percent per year. Despite that, its GDS rate only increased to 22 percent from 15 percent in the same period. This is in stark contrast to the scenario in countries like India, China, Indonesia, and Thailand. The Philippines, however, had a low savings rate like Bangladesh. A common feature of both countries is their large remittances and the broad-based growth effects in the economies. In both Bangladesh and the Philippines, gross national savings (GNS) rather than GDS caused greater investment. Thus, domestic savings were clearly not the key driver of growth in Bangladesh, which is inconsistent with the view of capital fundamentalists and neoclassical growth theory. The findings suggest that, in the short run, the direction of causality between savings and economic growth is unidirectional from economic growth to savings. And in the long run, there is no evidence of statistically significant causality in either direction. In other words, higher economic growth induced savings in Bangladesh in the studied period of time.
format	Working Paper
author	Rahman, Dr. Sultan Hafeez Hafeez, Dr. Sultan
author_facet	Rahman, Dr. Sultan Hafeez Hafeez, Dr. Sultan
author_sort	Rahman, Dr. Sultan Hafeez
title	The savings and growth nexus in Bangladesh
title_short	The savings and growth nexus in Bangladesh
title_full	The savings and growth nexus in Bangladesh
title_fullStr	The savings and growth nexus in Bangladesh
title_full_unstemmed	The savings and growth nexus in Bangladesh
title_sort	savings and growth nexus in bangladesh
publisher	BIGD
publishDate	2024
url	http://hdl.handle.net/10361/23791
work_keys_str_mv	AT rahmandrsultanhafeez thesavingsandgrowthnexusinbangladesh AT hafeezdrsultan thesavingsandgrowthnexusinbangladesh AT rahmandrsultanhafeez savingsandgrowthnexusinbangladesh AT hafeezdrsultan savingsandgrowthnexusinbangladesh
_version_	1814309000584364032

The savings and growth nexus in Bangladesh

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