| dc.description.abstract | This study examined the major determinants of gross domestic savings rate (GDS) in Kenya
using secondary annual data for the period 1971-2012. The macroeconomic variables used
include economic growth, real per capita income, deposit interest rate, M2, public savings
and current account balance. The model was estimated using co-integration and errorcorrection
models to analyze the short and long run equilibrium among the variables.
The ADF test shows that most variables contained unit root at levels except economic
growth. However, all variables were stationary after first difference. Results of the study
show that current account deficit, public savings and real per capita income play a significant
role in determining the gross domestic savings in Kenya in the long-run. The coefficient
analysis also shows that real per capita income gives a positive impact while the current
account deficit, public savings, rate of interest on deposits and broad money (M2) show
negative impact on domestic savings in the long run. The study also concludes that the speed
of adjustment is 63% which means that the model will correct short run disequilibrium
position at the rate of 63% annually.
The study also finds unidirectional causality which runs from economic growth (GGDP) to
gross domestic savings (GDS). The paper concludes that there is a potential for increased
domestic savings and this calls for policy changes and political will among policy makers
who should put more emphasis on current account balance, public savings, per capita income
and economic growth that influence savings. | en_US |
