Determinants of Private Sector’s Saving In Iran

Abstract

In this research, we test for the factors that determine private saving in the Iranian economy during 1968-2001 using auto regressive distributed lag model (ARDL). In this model, we examine the effects of factors such as disposable income, social security costs, unemployment rate, long term interest rate, inflation, Gini coefficient, ratio of the value of stocks exchanges to the terms of trade GDP, and a dummy variable for the post-war years. The results show positive effects of income, improvement of income distribution, and more developed financial markets, and negative effect of social security costs on the saving of private sector. Our results also indicate that the best and the most secured way to increase private saving is to improve financial markets performance that leads to a better absurbtion of saving and to an increases in investment possibility.

Keywords

• private saving
• disposable income
• social security costs
• gini coefficient
• income distribution
• stock exchange value
• financial market