Gross domestic product, savings, investment and inflation, an ARDL approach and Toda-Yamamoto causality: Evidence from Zimbabwe
This study examined the causal relationships between inflation, Gross Domestic Product (GDP), domestic savings, and investment in Zimbabwe using Toda-Yamamoto causality tests and the Autoregressive Distributed Lag (ARDL) approach with secondary data spanning from 1990-2022. The Granger causality ana...
Saved in:
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Growing Science
2025-01-01
|
| Series: | Accounting |
| Subjects: | |
| Online Access: | http://www.growingscience.com/ac/Vol11/ac_2025_1.pdf |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1841544177062510592 |
|---|---|
| author | Talent Kondo Simba Mutsvanga Tonderai Kanyekanye |
| author_facet | Talent Kondo Simba Mutsvanga Tonderai Kanyekanye |
| author_sort | Talent Kondo |
| collection | DOAJ |
| description | This study examined the causal relationships between inflation, Gross Domestic Product (GDP), domestic savings, and investment in Zimbabwe using Toda-Yamamoto causality tests and the Autoregressive Distributed Lag (ARDL) approach with secondary data spanning from 1990-2022. The Granger causality analysis revealed a bidirectional causal effect between inflation and GDP, indicating that inflation significantly impacts the country's economic growth. Additionally, the analysis showed a unidirectional causal relationship from inflation to domestic savings, suggesting that high and persistent inflation can erode the value of existing savings and discourage individuals from saving. Furthermore, the study found a distinct causal flow from savings to investment, without feedback in the opposite direction, highlighting the crucial role of a robust savings culture in providing the necessary foundation for sustained investment and economic growth. The ARDL approach provided further insights into the dynamic relationships between these variables. In the short run, lagged GDP and current and lagged savings positively influenced GDP, while the second lag of savings had a negative impact, supporting the Carroll-Weil hypothesis that savings typically follow, rather than precede, economic growth in the short run. The analysis also found a positive short-run and long-run relationship between investment and GDP, supporting the view that investment is an important factor of economic growth. The study recommends that the policy makers can leverage the synergies between savings, investment, and inflation management to foster sustained economic growth and development in line with the government development policies. Developing policies to attract savings and reduce the cost of savings, as well as promoting long-term savings over transactional savings, can increase the country's overall savings base.
|
| format | Article |
| id | doaj-art-f73e6d3e3ec64f19b8ffc194138f8a27 |
| institution | Kabale University |
| issn | 2369-7393 2369-7407 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Growing Science |
| record_format | Article |
| series | Accounting |
| spelling | doaj-art-f73e6d3e3ec64f19b8ffc194138f8a272025-01-12T13:36:10ZengGrowing ScienceAccounting2369-73932369-74072025-01-01111193010.5267/j.ac.2025.1.001Gross domestic product, savings, investment and inflation, an ARDL approach and Toda-Yamamoto causality: Evidence from ZimbabweTalent KondoSimba MutsvangaTonderai KanyekanyeThis study examined the causal relationships between inflation, Gross Domestic Product (GDP), domestic savings, and investment in Zimbabwe using Toda-Yamamoto causality tests and the Autoregressive Distributed Lag (ARDL) approach with secondary data spanning from 1990-2022. The Granger causality analysis revealed a bidirectional causal effect between inflation and GDP, indicating that inflation significantly impacts the country's economic growth. Additionally, the analysis showed a unidirectional causal relationship from inflation to domestic savings, suggesting that high and persistent inflation can erode the value of existing savings and discourage individuals from saving. Furthermore, the study found a distinct causal flow from savings to investment, without feedback in the opposite direction, highlighting the crucial role of a robust savings culture in providing the necessary foundation for sustained investment and economic growth. The ARDL approach provided further insights into the dynamic relationships between these variables. In the short run, lagged GDP and current and lagged savings positively influenced GDP, while the second lag of savings had a negative impact, supporting the Carroll-Weil hypothesis that savings typically follow, rather than precede, economic growth in the short run. The analysis also found a positive short-run and long-run relationship between investment and GDP, supporting the view that investment is an important factor of economic growth. The study recommends that the policy makers can leverage the synergies between savings, investment, and inflation management to foster sustained economic growth and development in line with the government development policies. Developing policies to attract savings and reduce the cost of savings, as well as promoting long-term savings over transactional savings, can increase the country's overall savings base. http://www.growingscience.com/ac/Vol11/ac_2025_1.pdfgross domestic productsavingsinvestmentinflationardl |
| spellingShingle | Talent Kondo Simba Mutsvanga Tonderai Kanyekanye Gross domestic product, savings, investment and inflation, an ARDL approach and Toda-Yamamoto causality: Evidence from Zimbabwe Accounting gross domestic product savings investment inflation ardl |
| title | Gross domestic product, savings, investment and inflation, an ARDL approach and Toda-Yamamoto causality: Evidence from Zimbabwe |
| title_full | Gross domestic product, savings, investment and inflation, an ARDL approach and Toda-Yamamoto causality: Evidence from Zimbabwe |
| title_fullStr | Gross domestic product, savings, investment and inflation, an ARDL approach and Toda-Yamamoto causality: Evidence from Zimbabwe |
| title_full_unstemmed | Gross domestic product, savings, investment and inflation, an ARDL approach and Toda-Yamamoto causality: Evidence from Zimbabwe |
| title_short | Gross domestic product, savings, investment and inflation, an ARDL approach and Toda-Yamamoto causality: Evidence from Zimbabwe |
| title_sort | gross domestic product savings investment and inflation an ardl approach and toda yamamoto causality evidence from zimbabwe |
| topic | gross domestic product savings investment inflation ardl |
| url | http://www.growingscience.com/ac/Vol11/ac_2025_1.pdf |
| work_keys_str_mv | AT talentkondo grossdomesticproductsavingsinvestmentandinflationanardlapproachandtodayamamotocausalityevidencefromzimbabwe AT simbamutsvanga grossdomesticproductsavingsinvestmentandinflationanardlapproachandtodayamamotocausalityevidencefromzimbabwe AT tonderaikanyekanye grossdomesticproductsavingsinvestmentandinflationanardlapproachandtodayamamotocausalityevidencefromzimbabwe |