Determinant Factors of National Saving in Iran with Particular Reference to Budget Deficit

The important role of savings in economic growth and development has been always a crucial issue for developing economies. The main purpose of present study was to investigate the factors affecting domestic national savings in Iran, during the period from 1343 to 1392 with emphasis on changing the government budget deficit. In order to to analyze the long-term and short-term relationships between the variables responsible, an auto regressive distributed Lag model (ARDL) was used. The results show that short-term and long-term impact of variables such as economic growth, interest rates and social insurance on national saving rate is statistically positive and significant. While, the effects of Government budget deficit and inflation rate is statistically negative and significant on savings rate. The results also indicate that, one percent increase in the rate of budget deficit, eventually leads to a decrease of national saving rate in long-term and short-term respectively, 0.0058 and 0/004 respectively. That means, the government deficit in the long term, has a greater impact than short-term shocks, on the reduction of national savings ratio to GNP. Furthermore, the coefficient of error correction is equal to -0.34 which indicates, in each period of the study, 34 percent of imbalances in national savings level is adjusted to long-term relationship.