Testing the Saving-Investment correlations in India: An Evidence from single-equation and system estimators.

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Title Testing the Saving-Investment correlations in India: An Evidence from single-equation and system estimators.
Author Singh, Tarlok
Journal Name Economic Modelling
Editor S. Hall and P. Pauly
Year Published 2008
Place of publication The United Kingdom
Publisher Elsevier
Abstract This study tests the Saving-Investment correlations in India using both single-equation and system estimators. All the estimators suggest the cointegrating relationship between saving and investment, and the results are robust to the choice of estimator. The conventional and new CUSUM tests show long-run stability of equilibrium residuals and reinforce the cointegrating relationship between the model series. The slope parameter on saving is significantly different from zero, but not from one. These results support the FH hypothesis and suggest the imperfect mobility of capital and home-bias in the asset portfolio of domestic investors. The heavy reliance of investment on domestic saving also reinforces the 'Lucas Puzzle' on the lack of capital flows from the developed countries to the developing countries with scare capital and higher marginal product of capital.
Peer Reviewed Yes
Published Yes
Alternative URI http://dx.doi.org/10.1016/j.econmod.2008.01.009
Volume 25
Issue Number 5
Edition September
Page from 1064
Page to 1079
ISSN 0264-9993
Date Accessioned 2009-03-12
Date Available 2011-06-13T22:58:14Z
Language en_AU
Research Centre Griffith Asia Institute
Faculty Griffith Business School
Subject International Economics and International Finance
URI http://hdl.handle.net/10072/22111
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1

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