Foreign capital inflows and domestic savings in Pakistan: Cointegration techniques and error correction modelling

Author Affiliation

Qazi Masood Ahmed is Associate Professor at Institute of Business Administration (IBA), Karachi

Faculty / School

Faculty of Business Administration (FBA)

Department

Department of Economics

Was this content written or created while at IBA?

Yes

Document Type

Article

Source Publication

Pakistan Development Review

ISSN

0030-9729

Disciplines

Geography | Growth and Development | Social and Behavioral Sciences

Abstract

The present study investigates the relationship between domestic savings and foreign capital inflows in Pakistan using cointegration and error-correction modelling of handling the non-stationary time series data. Applying three different cointegration techniques, the findings in this paper indicate that there is a valid long-run inverse relationship between domestic savings and foreign capital inflows. The Unrestricted Error Correction Model found short-run significance inverse relationship between domestic savings and foreign inflows but Short-Run Dynamic Engle-Granger procedure found insignificant inverse relationship between these two variables. The empirical results support the "Substitution thesis" hypothesis.

Indexing Information

HJRS - Y Category, Scopus

Publication Status

Published

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