IV Empirical Determinants of Growth, Savings, and Investment
Author:
Mr. Martin Mühleisen
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Mr. Dhaneshwar Ghura
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Mr. Roger Nord
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Mr. Michael T. Hadjimichael
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, and
E. Murat Ucer https://isni.org/isni/0000000404811396 International Monetary Fund

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Language:
English
Print Publication Date:
01 Jun 1995
Keywords:
OP; percent of GDP; real GDP; Excluding grant; GDP; CPI inflation rate; government savings; investment balance; CFA franc country; government investment; Real interest rates; Private investment; Financial statistics; Terms of trade; Sub-Saharan Africa; Africa; investment activity; CFA franc; standard deviation; unsustainable investment boom; Domestic savings; Public investment spending; Government debt management

Abstract

This section reports the results of an empirical investigation of the factors that influenced growth, savings, and investment in sub-Saharan Africa during 1986–92. A multiple regression framework is used to separate out the effects of macroeconomic stability on growth, savings, and investment while controlling for the effects of other variables. The empirical methodology used is outlined in the Appendix. Actual data covering 39 countries during 1986–92 were used.52 The time span covered by this study is somewhat short, and, thus, the empirical findings should be viewed as preliminary and interpreted with caution. However, these results tend to indicate that the behavior of growth, private investment, and domestic savings in sub-Saharan Africa is consistent with certain theoretical regularities. The findings also confirm the results of several previous empirical studies of growth, savings, and investment. In particular, these aggregates reacted favorably to a stable macroeconomic environment during 1986–92. The evidence suggests that macroeconomic stability is conducive to higher rates of savings and investment and to faster rates of economic growth. Nevertheless, the direction of causality between macroeconomic policy variables and foreign aid on the one hand, and growth, savings, and investment on the other hand, are not clear-cut. A full investigation of these causal relationships is beyond the scope of this study. However, the broad correlations presented in this section are indicative of the important links between macroeconomic stability and growth, savings, and investment.

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Cover Sub-Saharan Africa
Sub-Saharan Africa
Growth, Savings, and Investment, 1986-93
ISBN:
9781557754585
ISSN:
0251-6365
Publication Date:
01 Jun 1995
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781557754585.084
Pages:
86

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