The Effect of Savings Rate in Canada

6494 Words26 Pages
THE EFFECT OF SAVINGS RATE IN CANADA The impact of savings rate in an economic has become a very conflicting issue in research and among economist all over the world. This may be due to the importance of savings generally to the economic growth and development of any nation. However, the structure of every economy cannot be generalised by a particular economics’ variation because various countries have different social security and pension schemes, and different tax systems, all of which have an effect on disposable income. In addition, the age of a country’s population, the availability and ease of credit, the overall wealth, and cultural and social factors within a country all affect savings rates within a particular country. Therefore,…show more content…
All variables used in the study have been seasonally adjusted. For the period 1983 to 2010, table 1 below shows that SAV, PCI and DR had average values of .20366, 35.4638 and 5.4539 respectively and also had corresponding standard deviations of .024869, 6.4639 and 3.8434. SAV, which had the lowest mean and deviation from mean, also had a coefficient of variation of .094204 while PCI and DR had coefficient of variation of .14290 and .76027 respectively. The high coefficient of variation of DR implies that there is greater dispersion in the variable than in SAV which has the least dispersion. Table 1: Statistical Summary Sample period :1983Q1 to 2010Q4 Variable(s) SAV PCI DR Mean .20366 35.4638 5.4639 Standard Deviation .024869 6.4639 3.8434 Coefficient of Variation .094204 .14290 .76027 As shown in table 2 below, the correlations between the variables show that both PCI and DR were positively correlated with SAV. While PCI had a higher correlation with a value of .34810, DR had a lower correlation with a value of .12820. This correlation indicates a predictive positive relationship between the variables. It was also observed that RCPY and DR were negatively correlated with a value of -.86320. Table 2: Estimated Correlation Matrix of
Open Document