Analysis of factors influencing gross domestic savings in Uganda (2000 – 2018)

Abstract

The main aim of this study was to analyze the factors influencing Gross Domestic Savings in Uganda. The study was guided by three specific objectives, namely; to examine the short run determinants of Gross Domestic Savings, to examine the long run determinants of Gross Domestic Savings, and to determine the causal relationship between the determinants of Gross Domestic Savings and Gross Domestic Savings. The study utilized a secondary annual data from the period of 2000 to 2018 collected from the World Development Indicators database. The data was then transformed into a semi-annual data using the E-Views software and STATA 15.1 software was used in the data analysis. The result of the correlation analysis established that DIR had a moderate positive relationship with GDS, while M2 had a very weak positive correlation with GDS. GNE was established to have a very strong negative correlation with GDS. GDPg and CAB had a moderate negative relationship with GDS, while FDI had a weak negative relationship with GDS. The result of the multivariate analysis revealed that a percentage increase in GNE would lead to a 0.90 percentage reduction in GDS in the short run. In the long run, a percentage increase in CAB and GNE would lead to a 0.38 percentage and 1.27 percentage reduction in GDS, respectively and a percentage increase in DIR would lead to a 0.43 percentage increase in GDS. Therefore, the study concluded that GNE had a short run effect on GDS and CAB, GNE and DIR were established to have a long run effect on GDS in Uganda at 5 percent level of significance. Furthermore, the result of the causality test revealed that there was no causality between the variables in the study both in the short run and long run.