Empirical Economic Bulletin, An Undergraduate Journal


This paper investigates the possibility of interdependence between education and savings by looking at the relationship between a country’s government expenditure on education and the saving rate. Public education expenditure has been studied as an explanatory variable for economic growth, but similar studies determining its impact on household savings behavior are lacking. This research looks to determine Granger Causality using the Vector Error Correction Model between this measure of the quality of education and savings rate for Argentina. The results show bidirectional causality between the savings rate and government expenditure on education, as well as unidirectional causality with government expenditure on education to inflation and savings on unemployment.