TITLE:
Revalidating Saving-Investment Comovement in Nigeria: Surprises, Stylized Facts and Explanations
AUTHORS:
Enemona Joseph, Olatunji Abdul Shobande
KEYWORDS:
Saving, Investment, Economic Growth, Nigeria
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.15,
December
13,
2018
ABSTRACT: Numerous studies have attempted to examine the
relationship between savings and investment without a consensus conclusion. Interestingly,
there have been profound findings, arguments and scholarly contributions on the
subject by different authors, researchers and scholars from most first class
institutions around the world. To further heighten the argument around the subject,
Feldstein-Horioka in his hypothesis, after running many regression, suggests
that saving-investment co-movement under perfect capital mobility remains a
puzzle. This paper therefore proposes a reconciliation model to revalidate the
co-movement between savings and investment using the dataset sourced from the
Central Bank of Nigeria (CBN) Statistical Bulletin between 1981 and 2017. The
approach employed followed the Autoregressive Distributed Lag (ARDL) and
Granger Causality that presumed economic variables reactions are not
instantaneous and effects require a feedback mechanism delay for some period.
The results suggest the existence of strong positive correlation between
national savings and business investment, proposing that policies/initiatives
to increasing the domestic resource mobilization through national saving are crucial
for stimulating rate of investment in Nigeria.