Abstract

This study is an attempt to explore the impact of various factors on national savings of Pakistan including GDP, inflation, fiscal deficit and rate of interest. The study was prompted by the Word Bank report (2006) that painted showed a gloomy picture about the national savings of the country. The study is based on secondary data of the 1973-2011 periods. All variables used are found stationary except the one variable i.e. age dependency ratio. The study entails co-integration and ECM technique used mainly to find the long and short run equilibrium among the variables. The results fully supported the Johansen Co-integration and ECM tests. Result of the study concluded that GDP, inflation , and fiscal deficit play significant role in determining the national savings of Pakistan and coefficient analysis showed that growth rate and increased Government consumption give positive impact in increasing national savings while inflation possessing negative relation with national savings of the country. The coefficient results of the study show that except inflation all variables are influencing positively to national savings in the short run. It is further concluded that the speed of adjustment is 15.4% which shows that the model will correct disequilibrium position at the rate of 15.4% annually.

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