The Savings - Growth Investment relationship in a century of Argentine history
Keywords:
economic Growth, savings/investment, life cycle hypothesis, postkeynesian theory, Ramsey, granger causalityAbstract
Does savings causes growth as supply side economics holds? Or instead, growth drives savings as keynesian demand side economics states? Both approaches predict a close correlation between savings and growth so, veryfing the empirical relation between these variables does not support any of the approaches. To find out which of these theories is more closely related to reality, we ran a Granger causality tests between saving, investment and growth for the case of Argentina during the 1914-2003 period. We found robust evidence that savings does not Granger cause growht, while on the contrary, growht causes savings. The same result holds when investment is included in the tests, but these results match up closer to the historic characterization of each period. This match brings confidence about these findings, which also agree with recent research and with the causal relation that keynesian demand side economics supports. Estimations were done using different techniques including the new Toda and Yamamoto procedure.Article Metrics
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