Public expenditure and Private investment: a study of the UK and the USA

Abstract

The effect of fiscal measures on private investment is examined using variance decompositions derived from the error correction model. The empirical results of the study provide little support for the importance of fiscal measures in explaining variations of private investment. Output and profitability were the only two important variables in explaining forecast error variance of private investment in either country.

Public Investment and Economic Performance in Highly Indebted Poor Countries: An Empirical Assessment

“…Erenburg, 1993;Karras, 1994;Erenburg & Wohart, 1995;Flores de Frutos et al, 1998;Pereira, 2000Pereira, , 2001a find that crowding-in prevails. Finally, Monadjemi (1996), and Milbourne, Otto and Voss (2003) conclude that public investment has a positive but negligible effect on private investment.…”

Do Public Expenditure and Macroeconomic Uncertainty Matter to Private Investment? Evidence from Pakistan

“…Assuming individual time series are non-stationary and the private investment and its determinants are cointegrated, the dynamic private investment model can be represented by error correction mechanism. The relationship between cointegration and 1 Private investment is positively affected by income level as Chhibber and Wijnbergen (1988) for Turkey, Ramirez (1994) for Mexico, Monadjemi (1996) for Australia, and US, Mamatzakis (2001) for Greece, Pereira, and Sagales (2001) for Spain, Akkina, and Celibi (2002) for Turkey, Kim and Lim (2004) for Korea and Ouattara (2005) for Senegal.…”

Effects of Government Expenditure on Private Investment - China Empirical Evidence

“…For example, studies by Aschauer (1985) and Monadjemi (1993) provide evidence in support of the substitutability hypothesis whereas those by Erenburg(1993), Karras(1994), Erenburg and Wohar(1995) favour the complementarity hypothesis. Some recent multi-nation studies (e.g., Monadjemi 1996) show no strong evidence for either the crowding-out or crowding-in effects. Laopodis(2001) find evidence of crowding-out effect in some countries and of crowding-in effect in others.…”