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Title: |
Structural Changes and the Scope of Inflation
Targeting in Korea |
| Author: |
Hachicha, Nejib |
| Author
Affiliation: |
Faculte des
Siences Econ et de Gestion |
| Source: |
International Economic Journal, Winter 2003, v. 17, no. 4, pp. 43-60 |
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Publication Date: |
Winter 2003 |
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Abstract: |
The negative
relationship between capital inflows and savings in less developed
countries is an accepted fact in the existing literature. However, this
result is based essentially on standard econometrics which ignores the
nonstationarity of these two variables. This study investigates the
"direct" and "indirect" effect of capital inflows on savings in Tunisia
using Johansen's multivariate cointegration technique, weak exogeneity
test and simultaneous error correction modelling. In the short and long
run, the econometric estimates show that capital inflows have a negative
effect on domestic savings, which invalidates the Chenery-Strout thesis.
Nevertheless, the direction of causality between the aggregates being
dealt with still remains a subject of debate. Relying on time-series
data of the Tunisian economy, Granger's causality test shows a causal
relationship in the long term running from domestic savings to capital
inflows. In the short term, however, this paper reveals a two-way
causation. |
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