The Relationship between Domestic Savings and Investment: The Feldstein-Horioka Test Using Nigerian Data

Authors

Inuwa Nasiru, Central Bank of NigeriaFollow
Usman M. Haruna, Central Bank of Nigeria

Keywords

Savings, Investment, Capital Mobility, ARDL

Abstract

This study explores the relationship between savings and investment in Nigeria during the period 1980-2011. Unlike previous studies, this study employed Autoregressive Distributed Lag (ARDL) Bounds testing approach to test for long run relationship. The short-run dynamics are also captured from error correction model (ECM).The results of the Bounds test suggest that there is a long run relationship between savings and investment. This result is consistent with a number of earlier studies reviewed in the literature that found saving and investment to be cointegrated in the long run. The results also support the Feldstein-Horioka (1980) hypothesis that postulates low capital mobility internationally.

Author Bio

The author is staff of the Department of Economics, Faculty of Arts and Social Sciences, Gombe State University

Publication Title

CBN Journal of Applied Statistics 2013

Issue

1

Volume

4

Recommended Citation

Nasiru, Inuwa and Haruna, Usman M. (2013) "The Relationship between Domestic Savings and Investment: The Feldstein-Horioka Test Using Nigerian Data," CBN Journal of Applied Statistics (JAS): Vol. 4: No. 1, Article 5.
Available at: https://dc.cbn.gov.ng/jas/vol4/iss1/5