Impact of macroeconomic and microeconomic variables on firm investment: Mexican service sector, 2000-2016

2021 ◽  
Vol 39 (8) ◽  
Author(s):  
Francis Peujio
Keyword(s):  
Service Sector ◽  
Negative Impact ◽  
Positive Impact ◽  
Public Investment ◽  
Private Investment ◽  
Impulse Response Functions ◽  
Firm Investment ◽  
Macroeconomic Policies ◽  
Long Run ◽  
The Impact

A large and positive relationship is found to exist in the long-run between Public Investment Expenditures and Firm Investment which shows that public investment crowds in private investment using ARDL model at macroeconomic level on the Mexican service sector over the period 2000-2016. I also use the system-GMM PVAR to analyse the impact of microeconomic variables on firm investment. Exports have a strong and positive impact while Imports have a large and negative impact on firm investment. At the microeconomic level, taxes payments slightly obstruct firm investment. Using impulse response functions, I find that long-run macroeconomic policies are more important than short-run macroeconomic policies and that macroeconomic policies are more important than microeconomic policies for firm’s investment decisions.

Public and Private Investment and Economic Growth: An Empirical Investigation

2018 ◽  
Vol 63 (2) ◽  
pp. 87-106 ◽  
Author(s):  
Garikai Makuyana ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Positive Impact ◽  
Public Investment ◽  
Private Investment ◽  
Current Debate ◽  
Annual Data ◽  
Public And Private ◽  
Long Run ◽  
Short Run ◽  
Crowd Out

Abstract This paper provides new evidence to contribute to the current debate on the relative impact of public and private investment on economic growth and the crowding effect between the two components of investment in South Africa. Using annual data from 1970 to 2017, the study applies the recently developed Autoregressive Distributed Lag (ARDL)-bounds testing approach to cointegration. The study finds that private investment has a positive impact on economic growth both in the long run and short run, while public investment has a negative effect on economic growth in the long run. Further, in the long run, gross public investment is found to crowd out private investment, while its infrastructural component is found to crowd in private investment. The results of the study also reveal that both gross public investment and non-infrastructural public investment crowd out private investment in the short run. Overall, the study finds private investment to be more important than public investment in the South African economic growth process and that the importance of infrastructural public investment in stimulating private investment in the long run cannot be over-emphasized.

Impact of Foreign Capital on Economic Development in India: An Econometric Investigation

2017 ◽  
Vol 18 (3) ◽  
pp. 766-780 ◽  
Author(s):  
Kalpana Sahoo ◽  
Narayan Sethi
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Foreign Capital ◽  
Negative Impact ◽  
Positive Impact ◽  
Private Investment ◽  
Series Data ◽  
Domestic Investment ◽  
Long Run ◽  
Foreign Private Investment

The present study empirically investigates the long-run causal relationship between foreign capital and economic development in India by using the annual time-series data from 1990–1991 to 2013–2014. The study uses some selected macroeconomic variables such as per capita government expenditure on education (PcGEE, as an indicator of economic development), gross domestic product (GDP, as an indicator of economic growth), gross capital formation (GCF, as an indicator of domestic investment), official development assistance (ODA, as an indicator of foreign official inflows) and foreign direct investment (FDI, as an indicator of foreign private investment) for its empirical analysis. By using the cointegration test and the vector vector-error correction model (VECM) technique, this study finds that in the long run, domestic investment has shown a significant and positive impact on economic development, whereas, ODA, FDI and GDP have shown a significant negative impact on it. It concludes that domestic investment, foreign capital along with economic growth have a significant impact on economic development in India in long run. It suggests that the national developmental policy of India should focus on the productive utilization of both domestic and foreign capital along with it should give emphasis on effective transformation of growth benefits towards development process.

Real Effective Exchange Rate, Broad Money Supply, and Trade Balance in Vietnam: An Empirical Analysis from Bounds Test to a Cointegration Approach

2020 ◽  
Author(s):  
Kieu Oanh Dao ◽  
V.C. Nguyen ◽  
Si Tri Nhan Dinh
Keyword(s):  
Exchange Rate ◽  
Money Supply ◽  
Trade Balance ◽  
Negative Impact ◽  
Positive Impact ◽  
Real Effective Exchange Rate ◽  
Long Run ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
The Impact

This paper aims to investigate the impact of the real effective exchange rate and broad money supply on the trade balance in Vietnam using quarterly data from the first quarter of 2000 to the fourth quarter of 2018. Using the ARDL-ECM approach to investigate this effect, a cointegration relationship exists between real effective exchange rate, broad money supply and trade balance. Results demonstrate that real effective exchange rate has a short-term negative impact on trade balance. Additionally, broad money supply has a positive impact on trade balance in the short run and long run with a very weak effect. Surprisingly, it was found that real foreign income and local income have no impact on trade balance.

The assessment of budget expenditures impact on economic activity

2018 ◽  
pp. 28-45
Author(s):  
I. V. Belyakov
Keyword(s):  
Government Spending ◽  
Economic Activity ◽  
Private Consumption ◽  
Negative Impact ◽  
Positive Impact ◽  
Private Investment ◽  
Short Term ◽  
Government Investment ◽  
Macroeconomic Conditions ◽  
The Impact

The article explores the impact of government spending on the key components of economic activity in Russia, such as private consumption and investment. The author pays serious attention to the theoretical justifications of the possible impact of fiscal policy on economic growth and its components, as well as reviews the empirical results obtained in this area. In the empirical part of the article, government expenditures are represented by the “GDP by expenditure” items — government consumption and government investment. The results, for Russian data covering the period of 1995—2017, indicate a short-term positive impact of government spending on private consumption and a negative impact on private investment. It also proves important to take into consideration the changes in macroeconomic conditions that occurred approximately in the middle of the observed period.

Impact of Public and Private Infrastructure Investment on Economic Growth: Evidence from India

2020 ◽  
Vol 12 (2) ◽  
pp. 119-138
Author(s):  
Nishija Unnikrishnan ◽  
Thomas Paul Kattookaran
Keyword(s):  
Economic Growth ◽  
Public Investment ◽  
Impulse Response Function ◽  
Decomposition Analysis ◽  
Private Investment ◽  
Infrastructure Investment ◽  
Public Infrastructure ◽  
Public And Private ◽  
Long Run ◽  
The Impact

Literature presents contradictory views regarding the impact of public and private investment on the economic growth of a country. India being a developing country, where the major share of investment is by public sector, the question which props up is what among public and private investment is contributing more towards the economic growth of the country. In this framework, the gross domestic product (GDP) can be fairly explained as a function of public infrastructure investment and private infrastructure investment. Johansen’s co-integration was used to test the long-run relationship between the variables over the period from 1961–1962 to 2016–2017. A vector error correction model (VECM) along with an impulse response function and variance decomposition analysis was done to measure the impact of public infrastructure investment and private infrastructure investment on the GDP. Based on the empirical evidence discussed earlier, it was evident that both public and private infrastructure investments have a significant impact on the economic growth of the nation. Findings which came up in this study correlate to majority findings of past literature that, when compared with public investment, it is private investment which is capable of giving a better impetus to economic growth.

scholarly journals Effect of Public Investment on Private Investment: Evidence from Ethiopia

2022 ◽  
Vol 3 (1) ◽  
Author(s):  
Temesgen Merga
Keyword(s):  
Economic Growth ◽  
Positive Impact ◽  
Public Investment ◽  
Private Investment ◽  
Crowding Out ◽  
Bounds Testing ◽  
Policy Makers ◽  
Long Run ◽  
Short Run ◽  
Ardl Bounds Testing Approach

This study examined the effect of public investment on private investment and their relative effects on Ethiopia economic growth. The study employed the ARDL bounds testing approach. The empirical results revealed that public investment has a crowding-in effect on private investment in the long run which means, public investment stimulates private investment in the long run. However, the study revealed that public investment has a crowding out effect on private investment. In the other word, public investment has no direct impact on economic growth in the long run. However, private investment has a significant positive impact on economic growth in the long run while it is negatively related to economic growth in the short run. This suggests that private investment positively contributes to economic growth more than public investment. In addition, economic growth is positively associated with private investment although it is statistically insignificant in the long run. This implies that it is prudent for policy makers not to cut back on the efficient component of public investment and increase infrastructural public investment to a level that promotes private investment in the long run thereby indirectly fostering economic growth.

scholarly journals The Linkage between Public, Private Investment and Economic Growth—Evidence for the Developing ASEAN and Asian Countries

2017 ◽  
Vol 3 (4) ◽  
pp. 580 ◽  
Author(s):  
Nguyen Thi Canh, PhD. Prof. ◽  
Nguyen Anh Phong, PhD.
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Positive Impact ◽  
Public Investment ◽  
Private Investment ◽  
Public Private Partnership ◽  
Long Term Effects ◽  
Private Partnership ◽  
The Impact

<p><em>This study used a quantitative method to assess the impact of public investment on private investment and economic growth based on data from 18 developing countries over a 21-year period (1995-2015) by applying PVAR model combined with GMM. The findings show that all public investment and public-private partnership investments affect private investment as well as affect economic growth but the effects vary cyclically, by time period, and by group of countries.</em></p><p><em>For the ASEAN developing countries, public investment crowds out private investment in short term and crowds in private investment in the medium and long term, but it crowds out public-private partnership investment. For the developing countries in Asia, public investment has a positive impact on economic growth with the inverted U-shaped pattern which stimulates growth in the short and medium term, but in the long-term effects of stimulation growth tend to decrease.</em></p>

A Causal Analysis between Construction Flows and Economic Growth: Evidence from India

2011 ◽  
Vol 12 (2) ◽  
pp. 27-42
Author(s):  
Aviral Kumar Tiwari
Keyword(s):  
Economic Growth ◽  
Standard Deviation ◽  
Structural Breaks ◽  
Negative Impact ◽  
Positive Impact ◽  
Causality Test ◽  
Positive Direction ◽  
Dynamic Framework ◽  
Long Run ◽  
The Impact

The study examined the causal relationship between construction flows and economic growth under a static and dynamic framework by employing the Engel-Granger and IRFs approach with incorporation of endogenously determined structural breaks. The static causality test result provided the evidence of bidirectional Granger-causality between construction flows and economic growth in India. The dynamic causality analysis indicated that for the first ten years, a standard deviation innovation in construction had positive impact on the GDP, while the long-run impact was negative. However, a standard deviation shock/innovation in GDP had a negative impact on the construction flows of the economy for the first 10 years of the period under shock analysis, while for the long-run, the impact was in the positive direction.

scholarly journals Fragility of State in Central African Republic: An Econometric Approach to Efficiency Understanding

2018 ◽  
Vol 21 (3) ◽  
pp. 681-697
Author(s):  
Yapatake Kossele Thales Pacific
Keyword(s):  
Central African Republic ◽  
Negative Impact ◽  
Positive Impact ◽  
The State ◽  
Policy Implications ◽  
Long Run ◽  
Short Run ◽  
High Level ◽  
The Impact ◽  
Control Of Corruption

A fragile state contributes to the underdevelopment of the nation and its consequences can be very devastating on the state’s cohesion, characterized by a high level of corruption which led the country to an incessant political instability and the continuous presence of foreign troops. 1 This article used the vector autoregresssion (VAR) model covering the period of 2005–2015 to examine the impact of control of corruption on the fragility of the state in the Central African Republic (CAR). The results show that control of corruption is significant and has a negative impact on the fragility of the state in the short run. The impulse response shows a negative impact of control of corruption in the short run but a positive impact in the long run on the fragility of the state. The policy implications of this fragility are that the CAR must pursue better governance as well as in the investment choices. Unless the CAR leaders and citizens recognize their own fragility, things can only get worse.

scholarly journals The impact of budgetary and political institutions on fiscal cyclicality: Evidence from Egypt

2021 ◽  
Vol 10 (3) ◽  
pp. 72-84
Author(s):  
Sarah El-Khishin ◽  
Mohamed Zaky
Keyword(s):  
Fiscal Policy ◽  
Political Institutions ◽  
Negative Impact ◽  
Golden Rule ◽  
Electoral System ◽  
Impulse Response Functions ◽  
Long Run ◽  
The Government ◽  
New Variables ◽  
The Impact

We investigate the cyclicality of fiscal policy in Egypt during the period of 1976–2019 with a focus on how budgetary and political institutions affect fiscal performance during economic cycles. We define new variables for budgetary and political institutions and incorporate them in a vector error correction model (VECM) and impulse response functions (IRFs) analysis. While current and capital spending are proven to behave procyclically, revenues respond countercyclically during business cycles. Poor political and budgetary institutions have a negative impact on the primary deficit in a way that led to procyclical behaviour in fiscal policy in the long run. We recommend reinforcing the Golden Rule and changing the nature of the electoral system to a party-based to strengthen the role of parliament in keeping the government accountable

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