The Rrelationship Between Household Savings And Private Investment In Syria "Empirical Study: 1990-2019"

Abstract

The aim of this research is to analyze the evolvement of household savings and private investment in Syria during the period (1990-2019) to test the existence of the relationship between them and determine its type. Then, to measure the impact of household savings in private investments by employing econometric methods and assess the causality relationship between them. Following that, the ARDL methodology is used by testing the bound test and the error correction model. The unit root tests proved that both series became stable after taking the first difference, meaning they are first-degree integrated. The results of the co-integration test showed the existence of a long-term relationship between the two variables, and the results of the Granger causality test indicated that the causality goes from household savings to private investment. The results were verified in the ARDL methodology, and as expected it was found that there is a co-integration relationship in the long-term, according to the error-correction parameter, which was negative and significant. Precisely, the study found that a change in household savings by 1% leads to a change in private investment by about 0.14%. Based on the results of the estimated value of the error-correction coefficient, which amounted to about 24%, a little more than four years is needed to settle any shock in private investment in Syria. These results are consistent with the economic theory that confirms the existence of this equilibrium relationship between the two variables.