Public investment, taxation, and long-run output in economies with multi-level governments

2012 ◽  
Vol 29 (5) ◽  
pp. 1603-1611 ◽  
Author(s):  
Philip Bodman ◽  
Harry Campbell ◽  
Thanh Le
Keyword(s):  
Public Investment ◽  
Long Run ◽  
Multi Level

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

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.

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

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.

scholarly journals Decision between Public Investment and Public Consumption: A Policy Analysis

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.

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.

Does public investment crowd-out private investment in India

2017 ◽  
Vol 9 (1) ◽  
pp. 50-69 ◽  
Author(s):  
Shanmugam Muthu
Keyword(s):  
Public Investment ◽  
Private Investment ◽  
Infrastructure Investment ◽  
Public Infrastructure ◽  
Public And Private ◽  
Content Type ◽  
Macroeconomic Uncertainty ◽  
Long Run ◽  
Short Run

Purpose The purpose of this paper is to examine the crowding-in or crowding-out relationship between public and private investment in India. Design/methodology/approach The autoregressive distributed lag (ARDL) bounds testing approach is used to estimate the long run relationship between public and private investment using annual data from 1971-1972 to 2009-2010. Findings Based on the empirical findings, it is observed that aggregate public investment has a positive effect on private investment both in the long run and the short run. In contrast to the findings of previous studies, no significant impact of public infrastructure investment on private investments is found in the long run, while non-infrastructure investment has a positive impact on private investment in the short run. Among the various categories of infrastructure sector, a positive and significant impact in the case of electricity, gas and water supply is observed. Similarly, the result indicates that public investment in machinery and equipment and construction have substantially influenced the private sector machinery and equipment in the long run and the short run. In the case of the role of macroeconomic uncertainty, the results find a negative and significant impact on private investment and the impact is higher in the short run than in the long run. Originality/value The present study extends the literature in three important ways: First, the study attempts to capture heterogeneity of public investment as well as disaggregate effects of two different categories of public infrastructure on private investment. The extent to which two different types of public assets impact the private investment in machinery and equipment investment is also examined. Second, ARDL model is used to examine the long-run relationship between public and private investment. Third, the study incorporates macroeconomic uncertainty into the empirical analysis to examine the role of macroeconomic volatility in determining private investment decision.

REGIONAL CONVERGENCE OF ECONOMIC GROWTH DURING POST-REFORM PERIOD IN INDIA

2014 ◽  
Vol 59 (02) ◽  
pp. 1450012 ◽  
Author(s):  
JAGANNATH MALLICK
Keyword(s):  
Economic Growth ◽  
Growth Models ◽  
Public Investment ◽  
Private Investment ◽  
Club Convergence ◽  
Conditional Convergence ◽  
Indian States ◽  
Middle Income ◽  
The Public ◽  
Long Run

This paper examines the club-convergence and conditional convergence of economic growth of the major 15 states in India over the periods from 1993–1994 to 2004–2005 by using dynamic fixed effect growth models. The result finds that there is club-convergence within the middle income states. There is also evidence of the convergence of per capita income among Indian states by conditioning private investment and public investment along with other factors of economic growth. This paper is innovative in separating the significance of private investment from the public investment in the long-run dynamics of income in Indian states. This paper suggests that regional disparity in income can be reduced by equitable allocation of private investment and equitable distribution of public investment.

scholarly journals The Macroeconomic Effects of Exogenous Fiscal Policy Shocks in Germany: A Disaggregated SVAR Analysis

2010 ◽  
Vol 230 (3) ◽  
Author(s):  
Jörn Tenhofen ◽  
Guntram B. Wolff ◽  
Kirsten H. Heppke-Falk
Keyword(s):  
Fiscal Policy ◽  
Public Investment ◽  
Government Expenditure ◽  
German Economy ◽  
Public Employees ◽  
Positive Effects ◽  
Long Run ◽  
Policy Shocks ◽  
Net Revenue ◽  
Direct Government

SummaryWe investigate the effects of fiscal policy shocks on the German economy extending the SVAR approach of Blanchard and Perotti (2002). Direct government expenditure shocks are found to increase output and private consumption on impact. The output multiplier is smaller than one and is falling rather quickly reaching zero after 3 years. Government operating expenditure has size able positive effects on output, in the long run in particular due to public capital formation. Compensation of public employees is not effective in stimulating the economy.Government net revenue shocks do not affect output significantly. Indirect taxes have little effects, while direct taxes lower output significantly. Overall, the effects of fiscal policy are short-lived with the exception of public investment increases.

scholarly journals The Impacts of Temporary and Permanent Public Health Policies on HRQOL in a Small Open Economy

2021 ◽  
Vol 13 (17) ◽  
pp. 9866
Author(s):  
Yasuhiro Nakamoto ◽  
Taketo Kawagishi
Keyword(s):  
Public Health ◽  
Open Economy ◽  
Public Investment ◽  
Small Open Economy ◽  
Health Policies ◽  
Public Health Policies ◽  
Long Run ◽  
Related Quality ◽  
Health Related ◽  
The Government

Considering that people can invest in their health-related quality of life (HRQOL), we investigate the effects of public health policies (i.e., a health investment subsidy policy and the direct distribution of health-related goods) on HRQOL in a small open economy. We find that when the government makes public investment in HRQOL temporarily, HRQOL deteriorates or does not improve at least. On the contrary, when public investment is enforced permanently, it improves in the long run.

scholarly journals Public / Private Investment Linkages: A Multivariate Cointegration Analysis

2005 ◽  
Vol 44 (4II) ◽  
pp. 805-817
Author(s):  
Abdul Rashid
Keyword(s):  
Public Investment ◽  
Empirical Studies ◽  
Private Investment ◽  
Developed Countries ◽  
Cointegration Analysis ◽  
Public And Private ◽  
Empirical Results ◽  
Long Run ◽  
Stable Association ◽  
The Developed Countries

The issue of whether public investment crowds out or crowds in private investment has received considerable attention in the economic literature. Most of the empirical studies that examined the long run stable association between public and private investment have focused on examining this relationship for the developed countries with very little attention on the developing countries. The empirical results of these studies, however, are highly controversial. The existing empirical studies in this area can be divided into three categories. The studies in the first category including Barro (1974), Kormendi (1983), and Feldstein (1982) have examined the empirical implications of the Ricardian equivalence hypothesis (REH). The empirical results of most of the studies in this category were supportive of the REH. Seater (1993) argues that good empirical studies generally provide evidence in support of the REH; however, some studies refute it owing to the lake of econometric accuracy.

Sign in / Sign up

Export Citation Format

Share Document