Causality Test Between Savings and Income of Bangladesh (1972-2013) and Conditional Income Convergence of Bangladesh and India

Abstract

This thesis examines empirically the long-run relationship between per capita income growth rate (GDPPCGRB) and savings growth rate (GDSGRB) for Bangladesh (1972-2013). The study uses annual time series data. The study also tested to know whether there is income convergence between Bangladesh and India. The concept of conditional income convergence has been used in this thesis. Time series methods have been used for analysis of data. Correlogram and graphical analysis used as an informal procedures and Augmented Dickey Fuller (ADF) test used for formal analysis to carry out the empirical analysis. The Granger causality test supports bidirectional causality between per capita income growth and savings growth in Bangladesh. OLS technique has been used for convergence purpose. The test results contains that conditional income convergence hypothesis do work between Bangladesh and India.