Savings-Growth Nexus in Nigeria: An Asymmetric ARDL Approach

Keywords: Savings, GDP. Non-linear, Asymmetric ARDL, Nigeria

This study investigates the asymmetric relationship between savings and growth in Nigeria

between 1970 and 2020. The study employs Asymmetric ARDL method in tracing the non-linear

relationship between the variables. The study discovered using non-linear ARDL (NARDL)

causality that there was a unidirectional causal relationship running from the positive component

of savings to real GDP in the short-run, long-run and very long-run (strong causality). This

implies that the positive component of savings is a determinant of real GDP in Nigeria. The

result further showed that there was significant positive relationship between positive component

of savings and real GDP in the short and long-run but the negative component of savings was not

a significant determinant of real GDP both in the short-run and long-run, more importantly, the

study discovered an asymmetric relationship between savings and growth for the period under

studied. The study, therefore, recommended that savings must be encouraged in the country to

have more investment base as a sound fiscal policy that could propel growth, because the

negative effect of dis-savings on growth is more pronounced than the positive effect of savings

on growth.

Yetunde Adegoke

Lecturer, Federal University Oye Ekiti State, Department of Economics