Savings, Financial Development, and Economic Growth in the Arab Republic of Egypt Revisited
Private savings play a pivotal role in financing development and sustaining growth. Recently, there have been many theoretical developments that underpin key determinants of savings behavior, many of which merit empirical investigation. Understandi...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/562261491240790010/Savings-financial-development-and-economic-growth-in-the-Arab-Republic-of-Egypt-revisited http://hdl.handle.net/10986/26365 |
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okr-10986-263652021-06-08T14:42:48Z Savings, Financial Development, and Economic Growth in the Arab Republic of Egypt Revisited Hussein, Khaled Mohieldin, Mahmoud Rostom, Ahmed SAVINGS FINANCIAL DEVELOPMENT ECONOMIC GROWTH TIME-SERIES MODELS LIFE CYCLE MODEL UNCERTAINTY PERMANENT INCOME HYPOTHESIS INTEREST RATE PRIVATE SAVINGS INFLATION EXCHANGE RATES MACROECONOMIC POLICY Private savings play a pivotal role in financing development and sustaining growth. Recently, there have been many theoretical developments that underpin key determinants of savings behavior, many of which merit empirical investigation. Understanding the dynamics of the determinants of savings is crucial to inform economic policy and devise reform programs. This paper builds on earlier work examining the stability of the long-run relationship between the real interest rate, financial saving, and total saving during 1960 to 1990. The paper extends the scope of the empirical investigation of the determinants of private savings behavior in the Arab Republic of Egypt, and considers the effect of financial development. The analysis uses quarterly data covering 1991–2010, adopting a vector error correction model. The key findings attest that private savings in Egypt follow the Life Cycle Model in the long term. Controlling for population growth, the analysis finds that the real interest rate and financial development are key determinates for real private savings in the long run. The negative long-run relation between the real interest rate and private savings holds under the proposed model structure as well as for that in the earlier work. However, in the short run, inflation and exchange rate movements are key determinants for private savings decisions. Robust economic policies, inclusive of macroeconomic and monetary measures, are prerequisites for maximizing private savings and financing growth in Egypt. 2017-04-13T20:01:09Z 2017-04-13T20:01:09Z 2017-04 Working Paper http://documents.worldbank.org/curated/en/562261491240790010/Savings-financial-development-and-economic-growth-in-the-Arab-Republic-of-Egypt-revisited http://hdl.handle.net/10986/26365 English en_US Policy Research Working Paper;No. 8020 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Policy Research Working Paper Publications & Research Publications & Research :: Policy Research Working Paper Middle East and North Africa Egypt, Arab Republic of |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
SAVINGS FINANCIAL DEVELOPMENT ECONOMIC GROWTH TIME-SERIES MODELS LIFE CYCLE MODEL UNCERTAINTY PERMANENT INCOME HYPOTHESIS INTEREST RATE PRIVATE SAVINGS INFLATION EXCHANGE RATES MACROECONOMIC POLICY |
| spellingShingle |
SAVINGS FINANCIAL DEVELOPMENT ECONOMIC GROWTH TIME-SERIES MODELS LIFE CYCLE MODEL UNCERTAINTY PERMANENT INCOME HYPOTHESIS INTEREST RATE PRIVATE SAVINGS INFLATION EXCHANGE RATES MACROECONOMIC POLICY Hussein, Khaled Mohieldin, Mahmoud Rostom, Ahmed Savings, Financial Development, and Economic Growth in the Arab Republic of Egypt Revisited |
| geographic_facet |
Middle East and North Africa Egypt, Arab Republic of |
| relation |
Policy Research Working Paper;No. 8020 |
| description |
Private savings play a pivotal role in
financing development and sustaining growth. Recently, there
have been many theoretical developments that underpin key
determinants of savings behavior, many of which merit
empirical investigation. Understanding the dynamics of the
determinants of savings is crucial to inform economic policy
and devise reform programs. This paper builds on earlier
work examining the stability of the long-run relationship
between the real interest rate, financial saving, and total
saving during 1960 to 1990. The paper extends the scope of
the empirical investigation of the determinants of private
savings behavior in the Arab Republic of Egypt, and
considers the effect of financial development. The analysis
uses quarterly data covering 1991–2010, adopting a vector
error correction model. The key findings attest that private
savings in Egypt follow the Life Cycle Model in the long
term. Controlling for population growth, the analysis finds
that the real interest rate and financial development are
key determinates for real private savings in the long run.
The negative long-run relation between the real interest
rate and private savings holds under the proposed model
structure as well as for that in the earlier work. However,
in the short run, inflation and exchange rate movements are
key determinants for private savings decisions. Robust
economic policies, inclusive of macroeconomic and monetary
measures, are prerequisites for maximizing private savings
and financing growth in Egypt. |
| format |
Working Paper |
| author |
Hussein, Khaled Mohieldin, Mahmoud Rostom, Ahmed |
| author_facet |
Hussein, Khaled Mohieldin, Mahmoud Rostom, Ahmed |
| author_sort |
Hussein, Khaled |
| title |
Savings, Financial Development, and Economic Growth in the Arab Republic of Egypt Revisited |
| title_short |
Savings, Financial Development, and Economic Growth in the Arab Republic of Egypt Revisited |
| title_full |
Savings, Financial Development, and Economic Growth in the Arab Republic of Egypt Revisited |
| title_fullStr |
Savings, Financial Development, and Economic Growth in the Arab Republic of Egypt Revisited |
| title_full_unstemmed |
Savings, Financial Development, and Economic Growth in the Arab Republic of Egypt Revisited |
| title_sort |
savings, financial development, and economic growth in the arab republic of egypt revisited |
| publisher |
World Bank, Washington, DC |
| publishDate |
2017 |
| url |
http://documents.worldbank.org/curated/en/562261491240790010/Savings-financial-development-and-economic-growth-in-the-Arab-Republic-of-Egypt-revisited http://hdl.handle.net/10986/26365 |
| _version_ |
1764461802512449536 |