Analyzing the Savings-Investment Trend in a Panel of G-7 Countries

Abstract

This study examined the relationship between savings and investment in the G-7 countries for the period of 1970 to 2015. The stationary analysis of the data has been done by adopting the panel Levin, Lin & Chu, Breitung, Pesaran & Shin, ADF-Fisher & PP-Fisher criteria while the long run relationship has been tested by employing the Pedroni residual test of co-integration. The results neglected the existence of a long run correlation between saving and investment in G-7 countries. Further, joint causality between the savings and investment has also been tested using the fixed effect VAR model. Wald test explains that the two consecutive lags i.e. S (-1) and S (-2) of savings is jointly causing savings in the current year in the G7 countries. While the same two lags of investment i.e. I (-1) and I (-2) does not jointly granger cause savings in the G7 economies. The results are in line with Feldstein and Horioka (1980) that there is a stable and significant association between the increasing rates of savings and investment in the short run while this relationship weaken in the long run.

Goods and Services Tax and Sales and Services Tax in Malaysia: A Review of Literature

“…In contrast, SST operates on a single-stage basis, which means that the sales tax or service tax is imposed only once at the manufacturer stage (sales tax), importer stage (sales tax) or service provider stage (service tax). This means that the prices of goods and services will not be escalated with tax even though the supply chain is spread far and wide (Chong, 2018;Mansoor, Sultana & Saeed 2018).…”

Revisiting Keynes’ Investment and Saving Model in Indonesia

“…Meanwhile, some studies even show that there is no relationship between investment and saving in the studied countries (Esso & Keho, 2010;Gebeyehu, 2011;Sakalya, 2012;Mehrara & Musai, 2014;Ogbokor & Musilika, 2014;Aka, 2017;Mansoor, Sultana & Saeed, 2018). Further, several studies have tried to explain the positive two-way correlation between these two variables and suggest that the increased saving increases investment and vice versa (Mngqibisa, 2014;Irandoust, 2017).…”