Journal of Business and Management Sciences
ISSN (Print): 2333-4495 ISSN (Online): 2333-4533 Website: http://www.sciepub.com/journal/jbms Editor-in-chief: Heap-Yih Chong
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Journal of Business and Management Sciences. 2020, 8(2), 61-66
DOI: 10.12691/jbms-8-2-4
Open AccessArticle

Long-run Relationship of Economic Growth with Consumption, Unemployment Rates and Saving Rates in Developing Countries: A Case Study of Vietnam

Nguyen Thanh Giang1,

1Department of Public Finance, Academy of Finance, Hanoi, Vietnam

Pub. Date: May 13, 2020

Cite this paper:
Nguyen Thanh Giang. Long-run Relationship of Economic Growth with Consumption, Unemployment Rates and Saving Rates in Developing Countries: A Case Study of Vietnam. Journal of Business and Management Sciences. 2020; 8(2):61-66. doi: 10.12691/jbms-8-2-4

Abstract

The Keynesian macroeconomic model implies that household expenditures and savings have significant long-run impacts on economic growth by affecting total expenditures. Therefore, policymakers should determine and apply appropriate policies to maintain these variables. For this purpose, the long-run relationship of economic growth with consumption, unemployment and saving rates in Vietnam is analyzed with the time data method using annual data for the period 1996-2017. Consumption appears to have the most impact on economic growth in accordance with the estimation results of a co-integration test from an autoregressive distributed lag model (ARDL model). In long run, an increase of 1% in consumption expenditures decreases economic growth by 0.41%. A 1% increase in saving rates increases economic growth by 0.0009%. While an increase of 1% in unemployment rates decreases economic growth by 0.043%. Our results demonstrate that there exists only long run relationship among economic growth, consumption, saving and unemployment rates for Vietnam, but not in short run.

Keywords:
economic growth consumption saving unemployment rates long-run

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