Understanding the nexus between savings and economic growth: A South African context

Wyk, Bianca Flavia van; Kapingura, Forget Mingiri

doi:10.1080/0376835x.2021.1932424

Cited by 10 publications

(9 citation statements)

References 25 publications

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“…In line with this view, the Mundell-Fleming Model highlights the impact of monetary as well as fiscal policy on exchange rate balance and inflation (Bouakez & Eyquem, 2015). From the perspective of economic growth, Solow-Swan theory also highlights the role of investment and capital accumulation on the long-run growth of a country, while Keynesian theory focuses attention on the effect of the inflation rate on consumption and investment levels (Van Wyk & Kapingura, 2021). Research of Bouchetara and Bendahmane, (2017) focuses on indepth reviews of the complex relationship between exchange rates and inflation, emphasizing the role of government intervention and monetary policy in achieving economic stability.…”

Section: Literature Reviewmentioning

confidence: 98%

Causality Between Exchange Rates, Economic Growth and Inflation in Indonesia

Aprilia,

Hidayat,

Asngari

2024

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The primary objective of this study is to examine the causal relationships among exchange rates, economic growth, and inflation in Indonesia. The data used in this research is secondary data with time series data for the period 2000 to 2019, obtained from the Bank Indonesia, Indonesia Central Bureau of Statistics, and World Bank. The method used in this research is Granger Causality. The outcomes of the analysis reveal a bidirectional causal relationship between economic growth and the exchange rate in the short term, as well as between inflation and the exchange rate. An appreciation of a country's exchange rate of one percent has an impact on changes in the overall price of goods, while an increase in the inflation rate causes a depreciation of the exchange rate. The relationship between inflation and economic growth shows that there is a one-way causal relationship, namely that inflation affects economic growth but not vice versa. These findings have significant policy implications, indicating that the Indonesian government needs to prioritize efforts to control inflation to support sustainable economic growth. Therefore, it is necessary to implement appropriate monetary and fiscal policies to maintain price stability and encourage balanced economic growth in Indonesia.

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Section: Literature Reviewmentioning

confidence: 98%

Causality Between Exchange Rates, Economic Growth and Inflation in Indonesia

Aprilia,

Hidayat,

Asngari

2024

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“…As per the bidirectional hypothesis, there is a direct relationship between the two theories, which indicates the complementarity of the supply-leading and demand-following hypotheses (Demetriades and Hussein 1996;Greenwood and Smith 1997;Harrison et al 1999). Still, others argue for the existence of an independent hypothesis that indicates no causality between financial inclusion and economic growth (Lucas 1988;Stern 1989). On the basis of the above theories, it is possible to conclude that the theories on the causation between finance and economic growth do not apply uniformly to all economies and regions and thus need further investigation.…”

Section: Theoretical Foundation-finance and Economic Growthmentioning

confidence: 99%

“…However, the literature revealed a mixed result on the relationship between financial inclusion and economic growth. Some studies found a significant positive relationship between finance and economic growth (Kim et al 2018;Makina and Walle 2019;Dahiya and Kumar 2020), while others found the opposite (Seven and Yetkiner 2016;van Wyk and Kapingura 2021). On the other hand, several scholars argue that finance promotes economic growth, thus supporting the supplyleading hypothesis (Patrick 1966;Revell and Goldsmith 1970;King and Levine 1993).…”

Section: Introductionmentioning

confidence: 97%

Financial Inclusion and Economic Growth in Sub-Saharan Africa—A Panel ARDL and Granger Non-Causality Approach

Jima

Makoni

2023

JRFM

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Many earlier development finance studies have attempted to assess the relationship between financial inclusion and economic growth. However, the findings of these studies vary from economy to economy and region to region due to various social and economic factors. We, therefore, deemed it pertinent to examine the relationship between financial inclusion and economic growth while further identifying the direction of causality between the two variables in twenty-six (26) Sub-Saharan African (SSA) economies using annual secondary data over the 2000–2019 period. In our paper, we used the principal component analysis (PCA) technique to develop a single composite index to proxy financial inclusion while adopting panel unit root, system generalised method of moment (GMM), and ARDL cointegration tests to assess the stationarity properties, assess the factors that affect economic growth, and examine the long-run relationships between financial inclusion and economic growth, respectively. In addition, a Granger non-causality test is used to verify the direction and magnitude of causality. Our study revealed that financial inclusion and economic growth share a strong long-run relationship and that there is bi-directional causality, indicating synergy between these two variables. In order to ensure sustainable economic growth, we thus recommend that developing countries develop macroeconomic policies that will promote financial inclusion while enhancing the functioning and regulation of the domestic financial markets to ensure that all citizens are catered for in the available instruments, products, and service offerings. Within the same policy framework, efforts must be made to further support productive sectors of the economy to ensure economic growth.

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“…In addition, domestic savings and domestic loans to the private sector influence development in both directions. Multiple studies have shown a positive and an adverse reaction to the rate of domestic saving and domestic lending to the private sector, respectively (Khoueiri et al, 2021;Van Wyk and Kapingura, 2021;Rahman and Ferdaus, 2021). Both exports and imports contribute considerably to the economic growth of their respective nations.…”

Section: Literature Review On the Impact Of Industrial Value-added An...mentioning

confidence: 99%

Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth

Triantoro

Akhtar

Khan

et al. 2023

IJEEP

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Oil price fluctuations have always been controversial and remain significant in how a country's economy develops. It is especially easy for the worldwide price of natural resources to fluctuate, putting developing nations at risk of economic instability. Consider Pakistan's economy, which is very sensitive to changes in oil prices due to its reliance on the commodity. This research analyses the effects of oil prices on several macroeconomic indicators, including inflation, imports, gross savings, domestic lending to the private sector (DCPS), and industrial value-added in Pakistan. The study uses an error-correcting framework known as autoregressive distributed lag (ARDL) modelling to examine long-term connections between variables and their short-term implications. Additionally, data acquired between 1970 and 2020 was analyzed using Granger causality tests, impulse response functions (IRFs), and variance decomposition analyses (VDAs). The study found that inflation and domestic loans to the private sector hampered economic development in the near run. Conversely, imports, gross savings, industrial value added, and oil rents have a positive effect. A long-term connection between these variables was verified using the boundaries test. A unidirectional link was found in the causality tests between economic growth and imports, inflation and economic growth, and gross saving and domestic credit. An inverse link between domestic credit and inflation was found. The effect of oil rents on economic development in Pakistan is expected to rise during the next four years, according to the forecasts, before levelling out. According to the VDA results, the most critical factor influencing Pakistan's economic development over the next decade would be domestic lending to the private sector. Following these empirical results, the study proposes policy adjustments that might help Pakistan's economy expand more quickly and sustainably.

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Understanding the nexus between savings and economic growth: A South African context

Cited by 10 publications

References 25 publications

Causality Between Exchange Rates, Economic Growth and Inflation in Indonesia

Causality Between Exchange Rates, Economic Growth and Inflation in Indonesia

Financial Inclusion and Economic Growth in Sub-Saharan Africa—A Panel ARDL and Granger Non-Causality Approach

Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth

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