Saving in Saudi Arabia : an empirical investigation

Abstract EN

The aim of this study is to estimate a saving function for Saudi Arabia using dynamic OLS and error-correction models for the period 1968-1996.

The results from various models suggest that: (1) regarding the question of whether Saudi Arabia saves too much or too little, the study found that the country has been dynamically efficient only during 1982-1986; (2) in line with theoretical studies, income appeared an important determinant of domestic saving in the country, (3) birth rates, unexpectedly, showed positive effect on domestic saving; (4) a crowding out foreign capital inflow exists in the short run, and (5) real exchange rates exhibited significant effect on domestic saving only in the long run