Do Public Expenditures and Macroeconomic Uncertainty Matters for Private Investment? Evidence from Pakistan
The Pakistan Development Review 46 : 2 (Summer 2007) pp. 145 – 161
Date Written: 2007
This study examines the role of macroeconomic uncertainty and public expenditure in determining private fixed investment in Pakistan. It is founded that individual series are non-stationary. There is a long-run relationship between private fixed investment, public consumption expenditure, public development expenditure, and market activates. It is revealed that public development expenditure stimulates private investment, whereas public fixed investment function confirms that in the short run, public development expenditure enhances private investment. Moreover, macroeconomic instability and uncertainty depresses private investment in Pakistan.
Keywords: Private Investment, Public Expenditure, Macroeconomic Uncertainty, Co-integration, Pakistan
JEL Classification: E22
Suggested Citation: Suggested Citation