DETERMINANTS OF SAVINGS IN LESOTHO
Date
2017-05-10
Authors
TS’EPISO, CHRISTINA KHALECHANE
Journal Title
Journal ISSN
Volume Title
Publisher
University Of Bostwana
Abstract
This study examined the determinants of savings in Lesotho during the period 1982-2014.
Though similar studies have been done in other countries, few have been done in Lesotho. The
objectives of the study were to estimate the short-run and long-run determinants of savings in
Lesotho and to propose policies to guide future decision making of government. To achieve
these objectives, the study adopted the Auto Regressive Distributed Lag bounds approach in
analysing the determinants of savings in Lesotho. The empirical results indicate that in the
long run, Budget deficit, money supply and terms of trade were found to have a significant
positive effect on national savings in Lesotho. On the other hand, deposit rate and GDP per
capita income had a significant negative effect on national savings in the long run.
The results for short run indicate that budget deficit, deposit rate and GDP per capita income
have a positive effect on national savings. On the other hand, terms of trade was found to have
a negative effect on national savings in short run. Policy implications emerging from the
empirical results were that the government should expand their fiscal policy, reduce
unemployment rate by proving new opportunities for employment, resort to diversification and
also it should align its policies to those of South Africa since Lesotho’s economy is influenced
mostly by South African economy