Abstract:This study examines the role of macroeconomic uncertainty and
public expenditure in determining private fixed investment in Pakistan.
It is found that individual series are nonstationary. There is a
long-run relationship between private fixed investment, public
consumption expenditure, public development expenditure, and market
activities. It is revealed that public development expenditure
stimulates private investment, whereas public consumption expenditure is
detrime… Show more
“…There has been some work on crowdingin of private investment in the Pakistani context. The general finding is that public investment has a positive impact on private investment (Khan, 1988;Hyder, 2001;Naqvi, 2002;Ahmed & Qayyam, 2007) though some argue the opposite (Ghani & Ud Din, 2006).…”
Section: Why Transport Infrastructure Is Importantmentioning
As part of the massive One Belt One Road (OBOR) project or ‘New Silk Road’ the governments of China and Pakistan have announced that a significant ‘corridor’ will be constructed in Pakistan. This paper looks in detail at the $46 billion China-Pakistan Economic Corridor (CPEC) package of transport, energy and manufacturing projects and asks how we can analyse the impact of a transformative expansion of infrastructure. This paper draws lessons from various old-fashioned economics including Rostow, Hirschman and others and the historical case studies of transformative infrastructure expansion in the nineteenth century United States, Mexico, Germany and India to explore the conditions under which CPEC could promote sustainable long-run economic growth in Pakistan.
“…There has been some work on crowdingin of private investment in the Pakistani context. The general finding is that public investment has a positive impact on private investment (Khan, 1988;Hyder, 2001;Naqvi, 2002;Ahmed & Qayyam, 2007) though some argue the opposite (Ghani & Ud Din, 2006).…”
Section: Why Transport Infrastructure Is Importantmentioning
As part of the massive One Belt One Road (OBOR) project or ‘New Silk Road’ the governments of China and Pakistan have announced that a significant ‘corridor’ will be constructed in Pakistan. This paper looks in detail at the $46 billion China-Pakistan Economic Corridor (CPEC) package of transport, energy and manufacturing projects and asks how we can analyse the impact of a transformative expansion of infrastructure. This paper draws lessons from various old-fashioned economics including Rostow, Hirschman and others and the historical case studies of transformative infrastructure expansion in the nineteenth century United States, Mexico, Germany and India to explore the conditions under which CPEC could promote sustainable long-run economic growth in Pakistan.
“…Similarly macroeconomic instability and uncertainty affect negatively the private investment in Pakistan. Ahmad and Qayyum (2009a) analyze the investment behavior of private sector in large scale manufacturing. They explore the role of public expenditures (development and non development) and macroeconomic uncertainty in determining private sector's fixed investment in large scale manufacturing and indicated that public development expenditures enhance the private investment whereas nondevelopment expenditures and macroeconomic uncertainty negatively affect private investment.…”
Section: Review Of Literaturementioning
confidence: 99%
“…Ahmad and Qayyum (2007) examine the role of macroeconomic uncertainty and public expenditure in determining private fixed investment in Pakistan for the period 1972-2005. They find that there is a long-run relationship between private fixed investment, public consumption expenditure, public development expenditure, and market activities.…”
“…The real interest rate (Int) is constructed as the weighted average of three interest rates i.e. call money rate, discount rate and government bond yield rate (see Ahmad and Qayyum, 2009;Ahmad et al, 2008). After taking average, it is converted in real terms by subtracting GDP deflator inflation rate from the average.…”
Section: The Description Of Variables In the Systemmentioning
This study empirically explores the relationship among private domestic, foreign direct and public investments for Pakistan economy using time series data from 1960 to 2015. Simultaneous equations and Vector Error Correction Model (VECM) frameworks are employed to examine the inter relationship among the three categories of investments. The study primarily works out crowding-in/out effect. Notably, the crowding-out effect is observed showing substitutability among the three types of investments. The study also finds that public, private domestic and foreign direct investments have strong positive impacts on economic growth. The findings suggest that better economic environment and favorable investment climate are prerequisite to marginalize the crowding-out effect.
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