Abstract

Abstract This paper investigates the causal relationship between gross domestic savings (GDS) and GDP in a panel of 11 selected oil exporting countries by using panel unit root tests and panel cointegration analysis for the period 1970-2010. A three-variable model is formulated with oil exports as the third variable. The results show a strong causality from oil revenues and economic growth to savings in the oil exporting countries. Yet, savings does not have any significant effects on GDP in short-and long-run. It means that it is the oil and GDP that drives savings in mentioned countries, not vice versa. So the findings of this paper support the Keynesian point of view that it is higher economic growth that leads to higher saving growth. According to the results, decision makings should be employed to achieve sustainable growth through higher productivity and substantially enlarging the economic base diversification in the future. JEL classifications: C12; C33; E21; F43