Macroeconomic determinants of saving in South Asia: Evidence from panel ARDL

The basic purpose of this research is to explore the short and long run macroeconomic determinants of saving in South Asian countries while saving has been disaggregated into gross saving and gross domestic saving. The study applied the panel ARDL model to analyze the short and long run determinants of saving. The study focuses on only four South Asian countries i.e., Bangladesh, India, Pakistan, and Sri Lanka from 1980 to 2019. The results depicted that GDP per capita growth, export growth, and money supply have positive and significant, while foreign direct investment has a significant and negative effect on gross saving in the long run. On the other hand, GDP per capita growth, money supply, and working age population have positive and significant, while foreign direct investment has a significant and negative effect on gross domestic saving in the long run. Bidirectional causality exists among the gross saving and GDP per capita growth, while unidirectional causality exists from working age population to gross domestic savings. Government has to increase the investment projects that lead to an increase in the employment level and income of the people, as well the government has to encourage local investment by stabilizing the market and discouraging foreign direct investment.