Savings and Economic Growth Nexus: Evidence from Nigeria

Abstract

This study examined the causal relationship between domestic private savings and economic growth in Nigeria for the period of 1980 to 2013. The study employed the augmented Granger causality test approach developed by Toda and Yamamoto (1995). The result showed a strong unidirectional causality from domestic private savings to economic growth in Nigeria. The result supported the Solow’s hypothesis. Also the evidence from Johansen co-integration result indicated that there is a positive long run relationship between domestic savings and economic growth. In view of the findings, appropriate policies mix that will enhance domestic savings in the country should be pursued.

Keywords: Domestic private savings, Economic growth, Toda and Yamamoto causality