Does Saving Cause Growth? : An Aggregate Approach

This study uses the Toda-Yamamoto procedure to find the direction of causality between growth and savings on four aggregated groups of countries defined by income level (The 2017 World Bank classification). Between these groups is represented each country of the world. Furthermore, possible differences regarding the causality nexus among these groupsare investigated. We find that the general causal direction is bifold and is harder to determine for higher income groups. These findings both support and contradict neoclassical growth models and empirical findings, showcasing the need of new theoretical models and new approaches in future research