Savings behaviour in Fiji: An empirical assessment using the ARDL approach to cointegration

Narayan, S and Narayan, P 2006, 'Savings behaviour in Fiji: An empirical assessment using the ARDL approach to cointegration', International Journal of Social Economics , vol. 33, pp. 468-480.


Document type: Journal Article
Collection: Journal Articles

Title Savings behaviour in Fiji: An empirical assessment using the ARDL approach to cointegration
Author(s) Narayan, S
Narayan, P
Year 2006
Journal name International Journal of Social Economics
Volume number 33
Start page 468
End page 480
Total pages 13
Publisher Emerald Group Publishing Ltd.
Abstract Purpose - This paper aims to delineate the short- and long-run relationships between savings, real interest rate, income, current account deficits (CADs) and age dependency ratio in Fiji using cointegration and error correction models over the period 1968-2000. Design/methodology/approach - The recently developed bounds testing approach to cointegration is used, which is applicable irrespective of whether the underlying variables are integrated of order one or order zero. Given the small sample size in this study, appropriate critical values were extracted from Narayan. To estimate the short- and long-run elasticities, the autoregressive distributed-lag model is used. Findings - In the short- and long-run: a 1 per cent increase in growth rate increases savings by over 0.07 and 0.5 per cent, respectively; a 1 per cent increase in the CAD reduces savings rate by 0.01 and 0.02 per cent, respectively; and the negative coefficient on the real interest rate implies that the income effect dominates the substitution effect, while in the short-run the total effect of the real interest rate is positive, implying that the substitution effect dominates the income effect. Originality/value - This paper makes the first attempt at estimating the savings function for the Fiji Islands. Given that Fiji's capital market is poorly developed, the empirical findings here have direct policy relevance.
Subject Economic Development and Growth
ISSN 0306-8293
Versions
Version Filter Type
Citation counts: Scopus Citation Count Cited 15 times in Scopus Article | Citations
Access Statistics: 109 Abstract Views  -  Detailed Statistics
Created: Mon, 06 Dec 2010, 14:11:00 EST by Catalyst Administrator
© 2014 RMIT Research Repository • Powered by Fez SoftwareContact us