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Determinants for Saving Lebanon

 

Determinants for Saving: Lebanon, 1974-2000

Roy J. Khoueiri

ISBN: 9953418616 (pbk.)
Publication: 2005
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In 1991, the war in Lebanon came to an end, and government authority was gradually restored. However, sixteen years of hostilities resulted in fundamental changes in the economy in the postwar years, causing the GDP to be lower than in the prewar period. This was also accompanied by inflationary pressure, a reduction in the purchasing power of the national currency, large fiscal deficits, and a severe decline in the standard of living among the middle class.
The economy's rate of savings out of the current income and the investment of such savings play a major role, along with other factors, in determining the growth of an economy. This book focuses on a study of savings in general, and their relation with growth and their influence on the GDP, inflation, and interest rates in particular.
Analysis will also shed light on the main factors behind the increase in the rate of poverty, income inequality, and the mismanagement of fiscal policy, which lead to negative public sector savings, crowding out investment and causing a drop in the GDP. In the long term, the study promotes developmental policies that should be adopted with respect to the determinants of saving and the direction of causality between saving and growth.

شهد العام 1991 نهاية الحرب في لبنان واستعادة السلطة الحكوميّة لذاتها تدريجيًّا. لكنّ ستّ عشرة سنة من العنف والتقاتل فرضت تغيّرات جذريّة في الاقتصاد اللبنانيّ على السنوات التي تلت الحرب، ودفعت بإجماليّ الناتج المحليّ إلى الانخفاض إلى ما دون المعدّل في سنوات ما قبل الحرب. وقد تزامن ذلك مع ضغوطات على الليرة اللبنانيّة في أسواق الصرف: تضخّم، وتدنّي القدرة الشرائيّة للعملة الوطنيّة، وعجز ماليّ كبير، وهبوط حادّ في المستوى المعيشيّ للطبقة الوسطى. وقد لعب معدّل الادّخار من الدخل الحاليّ وطريقة استثماره، دورًا كبيرًا وأساسيًّا في تحديد نموّ الاقتصاد.
وثمّة في الكتاب تركيز على دراسة الادّخار بشكل عامّ، وعلاقته بالنموّ وتأثيره على الناتج الاجماليّ المحليّ، وعلى التضخّم ومعدّلات الفوائد بشكل خاصّ. وهو يسلّط الضوء على العوامل الأساسيّة في ارتفاع مستوى الفقر وفروقات الدخل وسوء إدارة السياسة الماليّ التي أدّت إلى ادّخار سلبيّ في القطاع العامّ وغياب الصرف الاستثماريّ وانخفاض الناتج الاجماليّ المحليّ.
وتخلص الدراسة إلى وجوب تعزيز السياسات التي تدعم الادّخار، وتساعد على تخفيض الدين والتحديد الحرّ لمعدّلات الفوائد.

Determinants for saving: Lebanon, 1974-2000
Roy J. Khoueiri
First edition, 2005
Published by: Notre Dame University-Louaize, 2005
NDU Press©
P.O. Box: 72, Zouk Mikael – Lebanon
Printed by: Meouchy & Zakaria Printers – Beirut – Lebanon

About Stephen King
Stephen King is the author of more than fifty books, all of them worldwide bestsellers. His first crime thriller featuring Bill Hodges, MR MERCEDES, won the Edgar Award for best novel and was shortlisted for the CWA Gold Dagger Award. Both MR MERCEDES and END OF WATCH received the Goodreads Choice Award for the Best Mystery and Thriller of 2014 and 2016 respectively.

King co-wrote the bestselling novel Sleeping Beauties with his son Owen King, and many of King's books have been turned into celebrated films and television series including The Shawshank Redemption, Gerald's Game and It.

King was the recipient of America's prestigious 2014 National Medal of Arts and the 2003 National Book Foundation Medal for distinguished contribution to American Letters. In 2007 he also won the Grand Master Award from the Mystery Writers of America. He lives with his wife Tabitha King in Maine.

TABLE OF CONTENTS

ABSTRACT  9
INTRODUCTION  11
 Need for the Study  11
 Purpose of the Study  15
CHAPTER 1: HISTORICAL SURVEY OF THE LEBANESE ECONOMY: FROM PRE WAR TO POST WAR  21
 1.1 General Background  21
  1.11 Historical Apercu of the Pre-war Period  22
  1.12 Deterioration of the Parity of the Lebanese Pound and the Hyperinflation  23
  1.13 The Outstanding Debt in the Post war Period, 1990 –2000  27
  1.14 The Economic Recession of 1996-2000  28
  1.15 Lebanon and Selected Other Countries  29
 1.2 Poverty and Income Distribution  32
 1.3 Conclusion  40
CHAPTER 2: REVIEW OF LITERATURE  45
 2.1 Introduction  45
 2.2 Interest Rate Theories  46
 2.3 Income Hypotheses  48
  2.31 The Absolute Income Hypothesis  49
  2.32 The Relative Income Hypothesis  51
  2.33 The Permanent Income Hypothesis  56
  2.331 The Effect of Tax Cuts on Spending According to the PIH  61
  2.34 The Lifecycle Hypothesis  63
 2.4 Implications for Causality between Saving Rates and Rates of Economic Growth  73
 2.5 Conclusion  77
CHAPTER 3: PROCEDURES AND METHODOLOGY  79
 3.1 Introduction  79
  Table 3.1. National Saving  81
 3.2 Selection of National Variables for the Study  82
  Table 3.2. Explanatory Variables of National Saving  84
 3.3 Objectives of Multiple Regression  85
 3.4 Research Design of a Multiple Regression Analysis  85
 3.5 Assumptions in Multiple Regression Analysis  86
 3.6 Estimating the Regression Model and Assessing Over all Model Fit  88
  3.61 Evaluating the Variate for the Assumptions of Regression Analysis  92
 3.7 Conclusion  95
CHAPTER 4: INTERPRETING AND VALIDATING THE REGRESSION VARIATE  97
 4.1 Introduction  97
 4.2 Measuring the Degree and Impact of Multicollinearity  97
 4.3 Using the Regression Coefficients  99
 4.4 Validating the Results  104
  4.41 Confirmatory Regression Model  104
 4.5 Comparative Study: Lebanon versus Syria, Jordan, and Egypt  107
  4.51 Lebanon: From War to Post war  108
  4.52 Syria, Jordan, and Egypt  109
 4.6 Conclusion  111
CHAPTER 5: POLICY RECOMMENDATION  113
 5.1 Introduction  113
 5.2 Promoting Saving  114
 5.3 Fiscal Deficits and National Saving  117
 5.4 The Direction of Causality for Policy Recommendation  123
 5.5 Conclusion  125
CONCLUSION  127
 Post war Economies  127
 Saving, an Engine for Growth  127
 Summary and Limitations of the Research Findings  130
 Suggestions for Further Research  132
TABLES  135
 Table 1.1. Measures of GDP (in mil lions of Lebanese Pounds)  135
 Table 1.2. Selected Social Indicators  136
 Table 1.3. Real GDP and Real Per Capita GDP  137
 Table 1.4. Public Finances – Actual 1992 – 1997 (LL billion)  138
 Table 1.5a. Exchange Rate: Lebanese Pound / US Dollar (last month of the year)  139
 Table 1.5b. Exchange Rate: Lebanese Pound / US Dollar (last month of the year).  140
 Table 1.6. Outstanding Debt, 1992 – 1997 (LL billions)  141
 Table 1.7. Public Finances - Bud get 1992 – 1997 (LL billions)  142
 Table 1.8. Relative Distribution of Employment by Permanency Type, 1970 and 1996 (%)  142
 Table 1.9. Unemployment Rates by Age and Sex, 1970, 1996, and 1997 (%)  142
 Table 1.10. Earnings by Age Group, 1995 (%)  143
 Table 1.11. Distribution of Families Based on Monthly In come and Sector of Employment of Head of House hold, 1994 (%)  143
 Table 1.12. Average Monthly Income of Households (AMIH) in Lebanon at Nominal Prices, at Real Prices of 1988, and in US Dollar (1974-1999)  144
 Table 1.13. Average Monthly Income of Households (AMIH) by Income Bracket in Lebanon at Nominal Prices, at Real Prices of 1988, and in US Dollar (1974-1999)  144
 Table 1.14. Distribution of Income of House hold Head in Lebanon (1974-1999)  145
 Table 1.15. GDP at Constant Prices of 1995 (mil lions of US$)  146
 Table 1.16. Real Growth Rates of GDP at Constant Prices of 1995 (%)  147
 Table 1.17. GDP at Current Prices (mil lions of US$)  147
 Table 1.18. GDP Per Ca pita at Constant Prices of 1995 (US$)  148
 Table 1.19. Real Growth Rates of GDP Per Capita at Constant Prices of 1995 (US$)  148
 Table 1.20. GDP Deflator (%)  149
 Table 1.21. Percentage of Private Final Consumption Expenditures to GDP at Current Prices  149
 Table 1.22. Percentage of Gross Fixed Capital Formation to GDP at Current Prices  150
 Table 1.23. Percentage of Government Final Consumption Expenditures to GDP at Current Prices  150
 Table 1.24. Percentage of Exports to GDP at Current Prices  151
 Table 1.25. Percentage of Imports to GDP at Current Prices  151
APPENDIX: REGRESSION TABLES  153
 Regression 1: National saving as a function of real GDP, inflation, rates on de posits in LP, rates on de posits in $, and balance of payments  153
 Regression 2: Investment as a function of nominal savings in Lebanon  160
 Regression 3: Investment as a function of nominal savings in Syria  161
 Regression 4: Investment as a function of nominal savings in Jordan  163
 Regression 5: Investment as a function of nominal savings in Egypt  164
 Regression 6: Nominal GDP as a function of nominal savings in Lebanon  165
 Regression 7: Nominal GDP as a function of nominal savings in Syria  166
 Regression 8: Nominal GDP as a function of nominal savings in Jordan  168
 Regression 9: Nominal GDP as a function of nominal savings in Egypt  169
 Regression 10: Nominal GDP as a function of government consumption in Lebanon  170
 Regression 11: Nominal GDP as a function of government consumption in Syria  171
 Regression 12: Nominal GDP as a function of government consumption in Jordan  173
 Regression 13: Nominal GDP as a function of government consumption in Egypt  174
 Regression 14: Nominal GDP as a function of investment, government consumption, and private final consumption in Lebanon  175
 Regression 15: Nominal GDP as a function of investment, government consumption, and private final consumption in Syria  177
 Regression 16: Nominal GDP as a function of investment, government consumption, and private final consumption in Jordan  178
 Regression 17: Nominal GDP as a function of investment, government consumption, and private final consumption in Egypt  180
BIBLIOGRAPHY  183
INDEX  191

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