Determinants of Savings Behavior in Pakistan: An Empirical Evaluation Employing the ARDL Approach

Abstract

This article purposes to define the long and short run associations among savings rate, growth rate of per capita GNP, real rate of interest, deficits of current account (DCAs) and the rate of inflation in Pakistan employing ARDL cointegration (approach) and ECM for the span of 1973 to 2014. The recently formulated ARDL cointegration (approach) is employed, that is relevant if the variables are stationary at level or first order. The Sign of variables are according to the theory, while apart from growth rate of per capita GNP; all variables are statistically significant in the long and short run. The results of the study help to recommend some policy options for economic managers.