A revisation of the savings-growth nexus in Mexico

Through employing tests for long-term causality that are not dependent upon pretests of cointegration rank and unit roots, we find evidence in favour of the savings-growth relationship for Mexico over the period 1960-1996. While growth can be shown to be a stimulus for savings, contrary to Sinha and Sinha ((Economics Letters), 1998), the influence of savings on growth cannot be ruled out totally, especially over the short run. We further explore the complex dynamics of the functional inter-relationships and attempt to clarify this nexus.