EXPLORING THE LINKAGE BETWEEN DOMESTIC SAVINGS, INVESTMENT AND ECONOMIC GROWTH: EVIDENCE FROM THE EASTERN EUROPEAN ECONOMIES

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Çolak O.

SOUTH EAST EUROPEAN JOURNAL OF ECONOMICS AND BUSINESS, vol.20, no.1, pp.15-29, 2025 (ESCI)

  • Publication Type: Article / Article
  • Volume: 20 Issue: 1
  • Publication Date: 2025
  • Doi Number: 10.2478/jeb-2025-0002
  • Journal Name: SOUTH EAST EUROPEAN JOURNAL OF ECONOMICS AND BUSINESS
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus, IBZ Online, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, Central & Eastern European Academic Source (CEEAS), EconLit
  • Page Numbers: pp.15-29
  • Uşak University Affiliated: Yes

Abstract

Beyond the theoretical aspects, the interplay between savings, investment and economic growth has vital

importance in designing the proper economic policies for the long-run developmental objectives particularly

for developing countries. Accordingly, this present paper aims to investigate the dynamic linkage between

domestic savings, investment and economic growth for the Eastern European economies by incorporating

the annual panel data spanning over 1995-2021. By revealing the existence of long-run relationship, the

paper derives that savings and investment are the key factors of economic growth, which is vindicated by

the recently pioneered model so called cross-sectional autoregressive distributed lag (CS-ARDL) method. Furthermore, the results of panel causality tests confirm the validity of causal nexus running from savings and

investment to economic growth. In addition, the paper concludes with some policy recommendations that

are drawn upon the findings.