Short and Long-Run Effects of Public Investment: Theoretical Premises and Empirical Evidence

<p>This study investigates a relationship between agriculture and manufacturing industry output in Nigeria from 1982-2015, using the Granger causality, co-integration and error correction techniques. Empirical evidence reveals a bidirectional relationship between the sectors. Although, a positive and significant relationship exists in the short and long-run estimates, a long-run divergence from the vector error correction model suggest that changes in agricultural productivity are not restored to equilibrium, given that macroeconomic factors distort the linkage. Policy implications indicate that macroeconomic stability is a necessary condition for agricultural and manufacturing sectors to foster economic growth.</p>

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Do FDI and Public Investment Crowd in/out Domestic Private Investment in the SADC Region

Managing Global Transitions ◽

10.26493/1854-6935.19.3-25 ◽

2021 ◽

Vol 19 (1) ◽

pp. 3-25

Author(s):

Eslon Ngeendepi ◽

Andrew Phiri

Keyword(s):

Capital Expenditure ◽

Public Investment ◽

Trade Openness ◽

Government Expenditure ◽

Private Investment ◽

Policy Implications ◽

Domestic Investment ◽

Government Investment ◽

Long Run ◽

Short Run

Our study examines the crowding-in/out effect of foreign direct investment and government expenditure on private domestic investment for 15 members of the Southern African Development Community (SADC) for the period 1991–2019. The study employed the panel Pool Mean Group (PMG)/ARDL technique in estimating the short-run and long-run cointegration relationships between FDI, government capital expenditure and domestic private investment and adds three more variables for control purposes (interest rate, GDP growth rate and trade openness). For the full sample, FDI crowds-in domestic investment whilst government crowds-out domestic investment. However, in performing a sensitivity analysis, in which the sample was segregated into low and high income economies, both FDI and government investment crowd-in domestic investment whilst government expenditure crowds-out domestic investment in lower income SADC countries with no effect of FDI on domestic investment. Policy implications are discussed.

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Impact of Public Debt, Deficit and Debt Financing on Private Investment in a Large Country: Evidence from the United States

World Journal of Applied Economics ◽

10.22440/wjae.6.2.3 ◽

2020 ◽

Vol 6 (2) ◽

pp. 139-161

Author(s):

Amir Kia

Keyword(s):

Public Debt ◽

Public Investment ◽

Government Expenditure ◽

Private Investment ◽

Adjustment Costs ◽

The United States ◽

Direct Impact ◽

Large Country ◽

Long Run ◽

Short Run

This paper analyses the direct impact of fiscal variables on private investment. The current literature ignores one or more fiscal variables and, in many cases, the foreign financing of debt. In this paper, an aggregate investment function for an economy in which firms incur adjustment costs in their investment process is developed. The developed model incorporates the direct impact of government expenditure, public debt and investment, deficits and foreign-financed debt on private investment. The model is tested on US data. It is found that public investment does not have any impact on private investment, but government expenditure, deficit, debt and foreign-financed debt crowd out private investment over the long run. However, deficit crowds in the private investment over the short run.

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Decision between Public Investment and Public Consumption: A Policy Analysis

Global Economics Review ◽

10.31703/ger.2020(v-i).11 ◽

2020 ◽

Vol V (I) ◽

pp. 131-152

Author(s):

Muhammad Raashid ◽

Abdul Saboor ◽

Aneela Afzal

Keyword(s):

Public Investment ◽

Policy Decision ◽

Dynamic Stochastic General Equilibrium ◽

Dsge Model ◽

Structural Unemployment ◽

Government Investment ◽

Long Run ◽

Public Consumption ◽

Dynamic Stochastic ◽

Best Fit

This study aims to draw a policy decision between public investment and public consumption by designing a Dynamic Stochastic General Equilibrium (DSGE) model for the economy of Pakistan which is experiencing persistent shocks that have stressed the growth pattern. The DSGE model has a microeconomic foundation and justifies locus critics by envisioning an artificial economy. The model is evaluated and set to best fit for data through an exercise of moment matching. Government consumption shocks and Government Investment shocks are used to trace out the behaviour of the economy. The analysis confirms that Pakistan economy could go for capital formation through public investment but it results in compromised public consumption and structural unemployment. It is further concluded that the export base and long-run public investment programs are needed to achieve sustainable development in the economy.

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Análisis de la integración y dependencia de las políticas monetarias de la Unión Europea

Pecvnia Revista de la Facultad de Ciencias Económicas y Empresariales Universidad de León ◽

10.18002/pec.v0i2011.752 ◽

2013 ◽

pp. 47

Author(s):

María del Carmen González Velasco ◽

Roque Brinckmann

Keyword(s):

Monetary Policy ◽

Central Bank ◽

Empirical Evidence ◽

European Central Bank ◽

Central Banks ◽

Uncovered Interest Parity ◽

European Central ◽

Long Run ◽

Bank Of England ◽

Interest Parity

En este artículo se efectúa un análisis de la integración y dependencia de las políticas monetarias de la Unión Europea y, en concreto, de las políticas monetarias de la Unión Económica yMonetaria y de la zona no euro para el periodo comprendido entre Enero de 1999 y Septiembre 2009. Se aplica la metodología de la cointegración de Engle y Granger (1987) y de Johansen(1988) para contrastar la hipótesis de la paridad de tipos de interés no cubierta y se llega a la conclusión de que ambas políticas están cointegradas porque mantienen una relación de equilibrio a largo plazo. También se deduce una dependencia de la política del Banco de Inglaterra de la política del Banco Central Europeo, lo que confirma la importancia y el liderazgo de la Unión Económica y Monetaria.<br /><br />This study is to investigate the long-run relationship and dependence between the UME´s monetary policy and non-euro zone´s monetary policy for the period from January 4, 1999 to September 30, 2009. We use cointegration methodology to test the Uncovered Interest Parity Hypothesis and the results indicate a long-run cointegration and empirical evidence testifies a leader-follower pattern between the two central banks. According to this pattern, the Bank of England does follow the European Central Bank.

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Technological progress, non-price factors competitiveness, and changes in trade income elasticities: empirical evidence from South Korea and Hong Kong

European Journal of Economics and Economic Policies Intervention ◽

10.4337/ejeep.2020.0071 ◽

2020 ◽

pp. 1-26

Author(s):

Marco Flávio Cunha Resende ◽

Vitor Leone ◽

Daniele Almeida Raposo Torres ◽

Simeon Coleman

Keyword(s):

Growth Rate ◽

Hong Kong ◽

South Korea ◽

Empirical Evidence ◽

Technological Progress ◽

Innovation System ◽

Balance Of Payments ◽

Income Elasticities ◽

Long Run ◽

Catch Up

In the balance-of-payments-constrained growth model literature, income elasticities (IEs) are considered as the crucial element determining a country's long-run growth rate. Although the extant literature accepts that technology matters for IEs magnitude, explanations linking technology and IEs magnitude are limited. In this paper, we make use of the National Innovation System (NIS) concept from the Evolutionary School to explain the channels through which the size of a country's IEs is influenced by the level of development of its NIS, which in turn is a channel through which the non-price competitiveness factors work. Additionally, we empirically test the hypothesis that the catch-up allowed by NIS developments achieved in South Korea and Hong Kong improved their IEs over the 1980–1995 period. Our empirical results suggest a link between the level of NIS development and the size of the IEs.

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