ANALYZING THE DETERMINANTS OF HOUSEHOLD'S SAVING BEHAVIOUR IN PAKISTAN: ATHEORATICAL APPROACH

Abstract

The paper attempts to investigate the determinants of savings by the households in the
emergent economies like Pakistan. For this rationale the data of five years (time series)
has been collected from different sources likes the Pakistan economic surveys, World
Bank and the annual reports of the State Bank of Pakistan. The major variables have
been selected due to the time constraint and secondary data is used. Simple OLS
regression technique is applied to check the significance of the data. Before running the
regression the data is checked for the stationarity and unit root by the econometric
package Eviews version 5.0. It is found that employment and income of the house holds
have the significant and positive relation on the saving behavior while the tax burden
and the inflation have the significant but negative relation with the savings. The
coefficient of correlation R2 is found out to be 0.99 which shows that there is a very
strong association among the exogenous and indigenous variables. Keeping in view the
key role of national savings in the micro and macro economic stability government
should give importance to national savings for sustainable and debt free economy by
considering the key variables that are discussed in this paper.