Empirical Analysis of Saving and Investment Interrelationship in Malawi 1977-2017

  • Alfred Vilili


Objective – This paper assesses the causality and interrelationship between saving and investment in Malawi in order to establish a link of factors responsible for economic growth in this African Nation. This study also assesses the capital flow in the economy in the binary of savings and investment.

Approaches of Research – The research design on the study on savings and investment in Malawi in this paper is modelled on Feldstein and Horioka covering 1978 and 2007 period. This research has adopted two sets of tests, one is the Hansen cointgration and another is the bounds test. The idea is to test the uninterrupted link between savings and investment. This test is preceded by a unit root test. Perron developed an additional outlier model which uses endogenously determined structural breaks in saving. We will apply this model in our test.

Estimates/Conclusion – This study concludes that the most sought after macroeconomic connection between saving and investment is not remarkably connected in the case of Malawi. The findings rationally depict annual trends obtained from secondary data. The findings reveal that causality of savings and investment could not be established. Variations affecting saving and investments are not explained through the prevailing economic models.

Methodological Tools and Data – This study is primarily based on previous research on interconnectedness between investments and saving for other developing countries. However, the consistency of data and methodologies are tested for the country specific situations of Malawi. .

How to Cite
Alfred Vilili. (2020). Empirical Analysis of Saving and Investment Interrelationship in Malawi 1977-2017. International Journal of Advanced Science and Technology, 29(3), 8868 - 8880. Retrieved from https://sersc.org/journals/index.php/IJAST/article/view/11681