An Empirical Time Series Analysis on the Determinants of Gross National Saving in Ethiopia. ARDL Approach for Co-integration

Master's Thesis , 2014 , 109 Pages

Economics - Case Scenarios

The objective of this paper was to investigate the macroeconomic determinants of gross national saving in Ethiopia using time series annual data form 1970/71-2010/11. In this study, effort has been made to identify the long run and short run determinants of national saving in Ethiopia using an ARDL bounds testing approach and ECM to capture both short run and long run relationships. Estimated results revealed that financial development (FD) and Current account deficit (CAD) are significant determinants of gross national saving in Ethiopia in the long run. But gross national disposable income (LGNDI), dependency ratio (DR), budget deficit (BD) and inflation, approximated by consumer price index (CPI), found to be statistically insignificant determinants of gross national saving in Ethiopia in the long run.
However, in the short run, except consumer price index (CPI) and dependency ratio (DR) the rest of the explanatory variables such as gross national disposable income (LGNDI), financial development (FD), current account deficit (CAD) and budget deficit (BD) found to have statistically significant meaning in explaining gross national saving in Ethiopia. The speed of adjustment has value 0.66978 with negative sign, which showed the convergence of saving model towards long run equilibrium. The overall findings of the study underlined the importance of raising the level of income in a sustainable manner, minimizing the adverse impacts of budget deficit and inflation rate and creating competitive environment in the financial sector.

Inhaltsverzeichnis

• Abstract
• Acknowledgments
• List of Tables
• List of Figures
• Chapter One: Introduction
• 1.1 Background of the Study
• 1.2 Statement of the Problem
• 1.3 Objectives of the Study
• 1.3.1 General Objective
• 1.3.2 Specific Objectives
• 1.4 Significance of the Study
• 1.5 Scope of the Study
• 1.6 Organization of the Study
• Chapter Two: Literature Review
• 2.1 Theoretical Framework
• 2.2 Empirical Review
• Chapter Three: Methodology
• 3.1 Data and Sources
• 3.2 Model Specification
• 3.2.1 The ARDL Bounds Testing Approach
• 3.2.2 The Error Correction Model (ECM)
• 3.3 Model Estimation and Diagnostic Tests
• 3.3.1 Unit Root Tests
• 3.3.2 Cointegration Test
• 3.3.3 ARDL Bounds Testing Approach
• 3.3.4 Error Correction Model (ECM)
• 3.3.5 Diagnostic Tests
• Chapter Four: Results and Discussion
• 4.1 Unit Root Tests
• 4.2 Cointegration Test
• 4.3 ARDL Bounds Testing Approach
• 4.4 Error Correction Model (ECM)
• 4.5 Diagnostic Tests
• 4.6 Discussion of the Results
• Chapter Five: Conclusion and Recommendations
• 5.1 Conclusion
• 5.2 Recommendations
• Bibliography
• Appendix

Zielsetzung und Themenschwerpunkte

The main objective of this study is to investigate the macroeconomic determinants of gross national saving in Ethiopia using time series annual data from 1970/71-2010/11. The study aims to identify both the long-run and short-run determinants of national saving in Ethiopia using an ARDL bounds testing approach and ECM to capture both short-run and long-run relationships.

• The long-run and short-run determinants of gross national saving in Ethiopia.
• The impact of financial development, current account deficit, gross national disposable income, dependency ratio, budget deficit, and inflation on gross national saving.
• The speed of adjustment of the saving model towards long-run equilibrium.
• Policy recommendations for promoting national saving in Ethiopia.

Zusammenfassung der Kapitel

Chapter One provides an introduction to the study, outlining the background, statement of the problem, objectives, significance, scope, and organization of the research. It highlights the importance of national saving for economic growth and development in Ethiopia and identifies the need to understand the factors influencing saving behavior.

Chapter Two presents a comprehensive literature review on the theoretical and empirical studies related to the determinants of national saving. It examines various theoretical frameworks, including the life-cycle hypothesis, the permanent income hypothesis, and the overlapping generations model, and reviews existing empirical studies on the relationship between national saving and macroeconomic variables in different countries.

Chapter Three details the methodology employed in the study. It describes the data sources, model specification, estimation techniques, and diagnostic tests used to analyze the determinants of gross national saving in Ethiopia. The chapter focuses on the ARDL bounds testing approach and the Error Correction Model (ECM) as the primary methods for investigating both long-run and short-run relationships.

Chapter Four presents the results of the empirical analysis, including the unit root tests, cointegration test, ARDL bounds testing results, ECM estimates, and diagnostic tests. It discusses the findings regarding the significance of various macroeconomic variables in explaining gross national saving in Ethiopia, both in the long run and the short run.

Schlüsselwörter

The keywords and focus themes of the text include gross national saving, macroeconomic determinants, financial development, current account deficit, gross national disposable income, dependency ratio, budget deficit, inflation, ARDL bounds testing approach, Error Correction Model (ECM), Ethiopia, time series analysis, long-run relationship, short-run relationship, economic growth, and development.

• College: Addis Ababa University (Addis Ababa University)
• Course: Economics
• Author: Yohannes Ghebru Alemayehu (Author)
• Publication Year: 2014
• Pages: 109
• Catalog Number: V281887
• ISBN (eBook): 9783656762829
• ISBN (Book): 9783656762737
• Language: English
• Tags: emperical, time, series, analysis, determinants, gross, national, saving, ethiopia, ardl, approach, co-integration