Title
Foreign capital inflows and domestic savings in Pakistan: Cointegration techniques and error correction modelling
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
Keywords
FDI, Domestic saving, Domestic investment, OLS, Foreign capital inflow, Macroeconomic variable
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
Recommended Citation
Ahmad, M. H., & Ahmed, Q. M. (2002). Foreign capital inflows and domestic savings in Pakistan: Cointegration techniques and error correction modelling. Pakistan Development Review, 41 (4 PART 2), 825-836. Retrieved from https://ir.iba.edu.pk/faculty-research-articles/85
Publication Status
Published
