The wide range of controversies
surrounding the direction of causality between savings and economic growth necessitated this
study. The study was intended to investigate the relationship between
gross domestic savings and economic growth in
Ghana; with the specific objective of finding whether there exists a long run relationship between them, and it was also intended
to ascertain the direction of causality
between the two running actors in the study over the period of 1972 to
2013. The study employed Johansen cointegration test to reveal no long run
relationship between gross domestic savings and economic growth in Ghana. This
necessitated the usage of the VAR technique to estimate the short run
relationships. The finding was that there exists a unidirectional line of causation running from gross domestic savings toeconomic growth in Ghana.It is strongly recommended therefore that the Bank
of Ghana will use the monetary policy instruments to influence and advise the commercial banks on
the need to peg the
deposit rate relatively higher at least equal or little above the existing
interest rate. This is because the
deposit rate is the opportunity cost of money demand for other purposes.
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