The Effect of Government Expenditure on Private Investment in Ethiopia: A Time Series Analysis PDF Download

Author: Frew Hailu
Publisher: Anchor Academic Publishing (aap_verlag)
ISBN: 3954893541
Category : Business & Economics
Languages : en
Pages : 113

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

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

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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: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1498344658
Category : Business & Economics
Languages : en
Pages : 257

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This paper explores how fiscal policy can affect medium- to long-term growth. It identifies the main channels through which fiscal policy can influence growth and distills practical lessons for policymakers. The particular mix of policy measures, however, will depend on country-specific conditions, capacities, and preferences. The paper draws on the Fund’s extensive technical assistance on fiscal reforms as well as several analytical studies, including a novel approach for country studies, a statistical analysis of growth accelerations following fiscal reforms, and simulations of an endogenous growth model.

Author: Mr.Paolo Mauro
Publisher: International Monetary Fund
ISBN: 1451852096
Category : Business & Economics
Languages : en
Pages : 28

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This paper discusses the possible causes and consequences of corruption. It provides a synthetic review of recent studies that analyze this phenomenon empirically. In addition, it presents further results on the effects of corruption on growth and investment, and new cross-country evidence on the link between corruption and the composition of government expenditure.

Author: Frew Hailu
Publisher: GRIN Verlag
ISBN: 3656766711
Category : Business & Economics
Languages : en
Pages : 112

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Master's Thesis from the year 2014 in the subject Economics - Finance, grade: 1 (A), Wollega University (wollega University), course: Development Economics, language: English, abstract: 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. Keyword: Government expenditure, private investment, VAR, crowding-In, crowding out, Ethiopia

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

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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: Ms.Keiko Honjo
Publisher: International Monetary Fund
ISBN: 145192240X
Category : Business & Economics
Languages : en
Pages : 61

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This paper assesses the efficiency of government expenditure on education and health in 38 countries in Africa in 1984-95, both in relation to each other and compared with countries in Asia and the Western Hemisphere. The results show that, on average, countries in Africa are less efficient than countries in Asia and the Western Hemisphere; however, education and health spending in Africa became more efficient during that period. The assessment further suggests that improvements in educational attainment and health output in African countries require more than just higher budgetary allocations.

Author: Arnis Vilks
Publisher: Cambridge Scholars Publishing
ISBN: 1443892289
Category : Business & Economics
Languages : en
Pages : 385

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This collection investigates various issues of investment and credit that are of importance to any developing economy. It uses micro- and macro-economic data from Ethiopia to analyse such topics as determinants of foreign direct investment, of bank credit and trade credit, microfinance and poverty reduction, and rural credit issues. The book applies sophisticated, state-of-the-art statistical techniques to analyse the data and derive policy recommendations. To the extent that the Ethiopian economy shares many features and policy issues with other developing economies, the text will be of interest to academics working in the field of development economics, and also to policy makers and policy analysts in developing countries and in development agencies throughout the world.

Author: Richard K. Vedder
Publisher:
ISBN:
Category : Economic development
Languages : en
Pages : 20

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