Savings, Financial Development, and Economic Growth in the Arab Republic of Egypt Revisited

Hussein, Khaled ; Mohieldin, Mahmoud ; Rostom, Ahmed

World Bank, Washington, DC

关键词: SAVINGS;    FINANCIAL DEVELOPMENT;    ECONOMIC GROWTH;    TIME-SERIES MODELS;    LIFE CYCLE MODEL;   

DOI  :  10.1596/1813-9450-8020
RP-ID  :  WPS8020

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Private savings play a pivotal role infinancing development and sustaining growth. Recently, therehave been many theoretical developments that underpin keydeterminants of savings behavior, many of which meritempirical investigation. Understanding the dynamics of thedeterminants of savings is crucial to inform economic policyand devise reform programs. This paper builds on earlierwork examining the stability of the long-run relationshipbetween the real interest rate, financial saving, and totalsaving during 1960 to 1990. The paper extends the scope ofthe empirical investigation of the determinants of privatesavings behavior in the Arab Republic of Egypt, andconsiders the effect of financial development. The analysisuses quarterly data covering 1991–2010, adopting a vectorerror correction model. The key findings attest that privatesavings in Egypt follow the Life Cycle Model in the longterm. Controlling for population growth, the analysis findsthat the real interest rate and financial development arekey determinates for real private savings in the long run.The negative long-run relation between the real interestrate and private savings holds under the proposed modelstructure as well as for that in the earlier work. However,in the short run, inflation and exchange rate movements arekey determinants for private savings decisions. Robusteconomic policies, inclusive ofmacroeconomic and monetarymeasures, are prerequisites for maximizing private savingsand financing growth in Egypt.