Inflation and Gross Domestic Savings nexus in Ethiopia

Demilie Basha Hailu, Samson Abay

Abstract: The paper Endeavors to investigate the magnitude and direction effect of inflation on the gross domestic savings. In doing so, the writers undertake different diagnostic tests such as Augmented Dicky Fuller unit root tests, Ramsey functional misspecification test (RESET) hetroscedasticity, autocorrelation etc. Moreover, we use the Engle-granger co-integration approach to test the existence of long run associations among economic variables. Accordingly, the model doesnt confirm the existence of long run relationships and hence the short run model suggests that there appears an inverse relationship between macroeconomic uncertainty (inflation) and gross domestic savings. Moreover, the result reveals insignificant influence of real interest rate and a significant and positive effect of real GDP on savings.

Keywords: inflation, savings, Ethiopia

How to Cite?: Demilie Basha Hailu, Samson Abay, "Inflation and Gross Domestic Savings nexus in Ethiopia", Volume 5 Issue 8, August 2016, International Journal of Science and Research (IJSR), Pages: 1399-1401, https://www.ijsr.net/getabstract.php?paperid=ART2016873, DOI: https://dx.doi.org/10.21275/ART2016873