The causal relationship between savings and economic growth in the Southern African development community

Promoting high domestic savings rates in order to boost economic growth is one of the SADC macroeconomic targets. Based on both the Solow’s (1956) and the endogenous “AK” growth models that predict a positive relationship between savings and economic growth in a closed economy, and on the Aghion-Comin-Howitt’s (2006) hypothesis that assumes a positive relationship between savings and economic growth in an open economy, two separate empirical models were constructed to test the long-run relationship and the causality between savings and economic growth in the SADC region. To this end, annual time series data for ten SADC member states obtained from the World Bank Indicators over the period 1985-2015 were pooled. The Panel ARDL/Pooled Mean Group estimator developed by Pesaran, Shin and Smith (1997) was performed to analyse the data. The main findings are that domestic savings is positively related to GDP in an open economy, whereas in a closed economy, it is insignificant. In addition, the speed of adjustment revealed a bi-directional causality between savings and economic growth. However, the speed of adjustment is much slower when the model is estimated with savings as the dependent variable but faster when GDP is regressed as the dependent variable. Thus, SADC member states are encouraged to implement policies that promote domestic savings as well as attract foreign direct investments, in order to boost economic growth. GDP growth will, in turn, increase the level of domestic savings

Is it the natural rate or hysteresis hypothesis for unemployment rates in Newly Industrialized Economies?

The focus of our study is on determining whether unemployment rates in 8 New Industrialized Economies conform to the natural rate hypothesis or the hysteresis hypothesis. To this end, we employ a variety of unit of unit root testing procedures to quarterly data collected between 2002:q1 and 2017:q1. In summary of our findings, conventional unit root tests which neither account for asymmetries or structural breaks produce the most inconclusive results. On the other hand, tests which incorporate structural breaks whilst ignoring asymmetries tends to favour the natural rate hypothesis for our panel of countries. However, simultaneously accounting for asymmetries and unobserved structural breaks seemingly produces the most robust findings and confirms hysteresis in all unemployment rates except for the Asian economies/countries of Thailand and the Philippines

Is it the natural rate or hysteresis hypothesis for unemployment rates in Newly Industrialized Economies?

The focus of our study is on determining whether unemployment rates in 8 New Industrialized Economies conform to the natural rate hypothesis or the hysteresis hypothesis. To this end, we employ a variety of unit of unit root testing procedures to quarterly data collected between 2002:q1 and 2017:q1. In summary of our findings, conventional unit root tests which neither account for asymmetries or structural breaks produce the most inconclusive results. On the other hand, tests which incorporate structural breaks whilst ignoring asymmetries tends to favour the natural rate hypothesis for our panel of countries. However, simultaneously accounting for asymmetries and unobserved structural breaks seemingly produces the most robust findings and confirms hysteresis in all unemployment rates except for the Asian economies/countries of Thailand and the Philippines

Czy stopy bezrobocia w gospodarkach nowo uprzemysłowionych kształtują się zgodnie z hipotezą stopy naturalnej czy z hipotezą histerezy?

The focus of our study is on determining whether unemployment rates in 8 New Industrialized Economies conform to the natural rate hypothesis or the hysteresis hypothesis. To this end, we employ a variety of unit of unit root testing procedures to quarterly data collected between 2002:q1 and 2017:q1. Summarizing of our findings, conventional unit root tests which account neither for asymmetries nor structural breaks produce the most inconclusive results. On the other hand, tests which incorporate structural breaks while ignoring asymmetries tends to favour the natural rate hypothesis for our panel of countries. However, simultaneously accounting for asymmetries and unobserved structural breaks seemingly produces the most robust findings and confirms hysteresis in all unemployment rates except for Asian economies/countries of Thailand and the Philippines.Celem badania było ustalenie czy stopy bezrobocia w 8 gospodarkach nowo uprzemysłowionych kształtują się zgodnie z hipotezą stopy naturalnej czy z hipotezą histerezy. W tym celu zastosowano wiele rodzajów testów pierwiastka jednostkowego w odniesieniu danych kwartalnych zebranych między 1 kwartałem 2002 a 1 kwartałem 2017. Podsumowując ustalenia można stwierdzić, że konwencjonalne testy pierwiastka jednostkowego, które nie uwzględniają ani asymetrii, ani zmian strukturalnych, dają najbardziej niejednoznaczne wyniki. Z drugiej strony, testy uwzględniające zmiany strukturalne przy zignorowaniu asymetrii potwierdzałyby hipotezę stopy naturalnej dla przyjętego panelu państw. Jednak jednoczesne uwzględnienie asymetrii i niezauważalnych zmian strukturalnych wydaje się dawać najbardziej wiarygodne wyniki i potwierdza histerezę w przypadku stóp bezrobocia wszystkich państw, za wyjątkiem gospodarek/państw azjatyckich: Tajlandii i Filipin