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
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
