Government Expenditure and Private Investment: Evidence from Pakistan PDF Download

Author: Ur Rahman Moheeb
Publisher: LAP Lambert Academic Publishing
ISBN: 9783659745713
Category :
Languages : en
Pages : 68

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Book Description
This book is a unique attempt to unveil the effect of various government expenditure on private investment in case of Pakistan. Most of the studies provide knowledge about effect of a single government expenditure on private investment. This particular book has considered all the major government expenditure categories that has effect on Private investment on Pakistan. Further we provide empirical evidence of the various factors that influence private investment.

Author: Mr.Khaled Sakr
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 40

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Book Description
This paper investigates the determinants of private investment in Pakistan with special emphasis on the impact of government investment. Using annual data for the period 1973/74-1991/92, it is estimated that private investment was positively correlated to GDP growth, to credit extended to the private sector, and to government investment. When government investment is disaggregated into Its infrastructural and noninfrastructural components, the latter is found to be negatively correlated with private investment.

Author: Ghulam Madni
Publisher:
ISBN:
Category :
Languages : en
Pages : 14

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Book Description
Fiscal policy has much controversial debate regarding its effectiveness on private investment. Taxation and government expenditure are two main instruments of fiscal policy. This paper is aimed to analyze the effect of fiscal deficit and other variables on private investment of Pakistan. The data time span for this study is 1979-2012. After finding the integration order of all variables by Augmented Dicky Fuller Test, the impact of variables is analyzed by utilizing the Auto Regressive Distributed Lag approach of Cointegration which is a better estimation technique for small sample size. Error Correction Model is applied for short run dynamics. The results reveal that fiscal deficit, rate of interest, inflation and external debt are affecting negatively the private investment in Pakistan while exchange rate and exports have a positive impact on private investment.

Author: Ibrar H. Hussain
Publisher:
ISBN:
Category :
Languages : en
Pages : 20

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Book Description
The role of government in achieving economic growth through its fiscal policy, particularly spending policy cannot be overlooked. Investigation of public spending policy and its transmission mechanism to sustainable growth is imperative to the ultimate objective of welfare maximization. This study aims to identify the growth-oriented components of public expenditure as it seems useful to know the contribution of each component of spending towards the objective of economic growth. The study adopts the Kocherlakota and Yi's (1997) model as modified by Colombier (2008) to carry out the empirical analysis. To this end, ARDL is employed on annual data that ranges from 1973 to 2014 to estimate both the long-run and short-run dynamics between public expenditure composition and economic growth in Pakistan. The results indicate that public development expenditures are growth-oriented, while current expenditures reduce economic growth. Thus sustainable economic growth and sustainable development can only be materialized by changing the composition of public spending in favor of development expenditure. Since Pakistan is in the dire need of infrastructure and energy, therefore, allocation of more funds to Public Sector Development Programs (PSDP) are expected to add directly to growth on one hand and set a crowding-in effect for private investments--thereby enhancing growth indirectly--on the other hand.

Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1451974159
Category : Business & Economics
Languages : en
Pages : 30

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Book Description
This paper examines the empirical evidence on the contribution that government and, in particular, capital expenditure make to the growth performance of a sample of developing countries. Using the Denison growth accounting approach, this study finds that social expenditures may have a significant impact on growth in the short run, but infrastructure expenditures may have little influence. While current expenditures for directly productive purposes may exert a positive influence, capital expenditure in these sectors appears to exert a negative influence. Experiments with other explanatory variables confirm the importance of the growth of exports to the overall growth rate.

Author: Marukh Zahir
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
Investments in both public and private are essential to Pakistan's economy. Public investment is crucial for any nation's economic development, but private investment serves as a catalyst for the creation of jobs and income. The primary purpose of this study is to empirically examine the “crowding-out and crowding-in” effects of state spending on private investment in Pakistan. The 43 most recent years (1972-2015) of data were gathered and examined. The main data sources used for data collection were the “State Bank of Pakistan”, "the Economic Survey of Pakistan," and "World Development Indicators”. The researchers considered all forms of investment, including private investment, "government interest spending," “current government spending”, and current government spending transfer. In the analysis section, the “Augmented Dickey-Fuller” test was employed to gauge the stationarity of the variables. All of the study's variables were found to be non-stationary using the analytical tools. The results of the "vector error correction model" (VECM), which was employed to examine both long-run and short-run causation, illustrate that government interest spending has a substantial and encouraging impact on private investments.

Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1451977026
Category : Business & Economics
Languages : en
Pages : 30

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Book Description
This paper analyzes the effects of several policy and other macro-economic variables on the ratio of private investment to GDP in developing countries. Using data for a sample of 23 developing countries over the period 1975-87, the econometric evidence indicates that the rate of private investment is positively related to the real growth rate of GDP, public sector investment, and to a lesser extent the level of per capita GDP, while it is negatively related to domestic inflation, the debt service ratio, the debt-to-GDP ratio, and high real interest rates. There is also some indication that all but the last of these variables had a greater impact before the onset of the debt crisis in 1982, while the debt-to-GDP ratio (a measure of a country’s debt overhang) has become more important since then.

Author: Frew Hailu
Publisher: diplom.de
ISBN: 3954898543
Category : Political Science
Languages : en
Pages : 106

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Book Description
This study attempts to investigate the effect of government expenditure on private investment in Ethiopia over the period 1980-2012. The central question of this study is weather government expenditure has a positive or crowding in effect (complementary hypothesis) or a negative or crowding out effect (the substitutability hypothesis )on private investment in Ethiopia. To achieve its objective it adopted a modified flexible accelerator model to enlighten on the economic relationship between private investment and the other variables and used the modern technique of vector auto regressive model (VAR) and vector error correction model(VECM)as its methodology. The study also used the Johansen-Juselius (1990) cointegration analysis of a multivariate system of equation to estimate the long run relationship between government expenditure and private investment to determine the order of integration of the variable and Granger-Causality test was undertaken to determine causal relationship between the variables. In addition to this the study employs the Augmented Dicky-Fuller (ADF) unit root test and phillip perron test. The statistical tests reveal that all-time series data are non-stationary in their level and they become stationary after diffrencing.i.e.they are integrated of order one I(1).The johansen-juselius cointegration test shows that the series are cointegrated and then employs the vector error correction model moreover the study applies the impulse response function (IRF)and forecast error variance decomposition (FEVD) to investigate the effect of government investment shocks on private investment. And the empirical findings support the complementary hypothesis between government capital expenditure and private investment and that tends to crowd-in private investment in Ethiopia. And the empirical finding of recurrent part of government expenditure shows a mixed effect of complementary hypothesis and substitutability hypothesis which tends to crowd-in and crowd out effect .Thus government expenditure have a positive as well as negative effect on private investment and finally the study is used CHOW test in order to know whether structural break has an effect on private investment or not and the result depict that there is a structural break that have a positive effect on private investment of Ethiopia.

Author: John Cockburn
Publisher: Springer
ISBN: 3319031376
Category : Business & Economics
Languages : en
Pages : 156

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Book Description
Public spending on infrastructure plays an important role in promoting economic growth and poverty alleviation. Empirical studies unequivocally show that under-investment in infrastructure limit economic growth. At the same time, numerous other studies have shown that investment in infrastructure can be a highly effective tool in fighting poverty reduction1. In that context, the financing of infrastructure has been a critical element of most economic growth and poverty reduction strategies in developing countries, since the start of this millennium. This book provides a comparative analysis of the aggregate and sectoral implications of higher spending on infrastructure in three very different Asian countries: China, Pakistan, and the Philippines. Particular attention is paid to the role of alternative financing mechanisms for increasing public infrastructure investment, namely distortionary and non-distortionary means of financing. The book will be of interest to scholars and policy-makers concerned with economic growth in developing countries.

Author: Nadia Farooq
Publisher:
ISBN:
Category :
Languages : en
Pages : 9

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Book Description
The impact of government expenditures in economic growth is well understood and recognized. However, most of theoretical and empirical research on determining this role has focused on the impact of public investments, implicitly assuming that recurrent expenditure of the government is more or less irrelevant from the perspective of economic growth. Using Pakistani data, this study not only reiterates the positive impact of public expenditure on economic activity, but also highlights that primary recurrent expenditure is about as much important as public investment in enhancing economic activity. This is perhaps because in Pakistan government's development expenditure has more inherent inefficiencies than recurrent expenditures, as prolonged fiscal adversity has stripped that latter to “bare bones” to contain large inefficiencies. However, this also implies that simply creating structures and infrastructure is not enough to accelerate economic growth. Each structure has to be adequately financed for its operation and maintenance to give optimum results, which is done from recurrent spending. As such, this study points to a rethink on the role of public expenditure and its impact on growth, especially the composition of expenditure.