Saving, debt inflows, and growth Nexus in Tunisia

This paper investigates the causality links among domestic saving, external debt inflows, and economic growth in Tunisia over the period 1970-2008. The Autoregressive Distributed Lag (ARDL) approach proves cointegration relationships between the variables of interest and justifies the use of a Vector Error Correction framework to make Granger causality tests. In the short-run, we find bi-directional causality between private debt inflows and saving, and oneway causalities running from these inflows to growth and from the latter to saving. In the long-run, saving and growth Granger-cause private debt inflows, whereas public debt inflows Granger-cause saving. These results suggest some economic policies for Tunisia.