Do fiscal deficits influence private savings in South Africa? An empirical note

Orientation: The neoclassical loanable funds theory predicts that fiscal deficits reduce the pool of available savings in economy, but heterodox scholarship disputes claim.Research purpose: paper sets out to test relationship between and private savings.Motivation for study: Scholars are divided on whether corporate South Africa is building up excess savings, with some arguing it not others because mistrust government uncertainty largely. trends net suggest something contrary postulation could be happening African context.Research approach/design method: used data period 1960–2021 within Toda-Yamamoto vector autoregressive modelling framework.Main findings: results show increase interest rates line view financial asset creation effect debt-financed improves reduces interests through liquidity channel.Managerial/practical implications: lesson policy healthy economy. However, must manage them at reasonable level maintain a constant flow assets sector, thus bolstering savings. An unhealthy pursuit surpluses can shift households firms, breed systemic instability.Contribution/value-added: contributed nuanced understanding role expanding which runs counter theoretical underpinnings conduct pursues budget surpluses.