Journal of Business and Management Sciences
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Journal of Business and Management Sciences. 2020, 8(2), 61-66
DOI: 10.12691/jbms-8-2-4
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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


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.

economic growth consumption saving unemployment rates long-run

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