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New evidence on the relationship between public and private investment in India

Author

Listed:
  • Anirudha Barik

    (Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi)

  • Asit Ranjan Mohanty

    (Professor in Finance, Xavier University, Bhubaneswar)

Abstract

The purpose of this paper is to examine the long run relationship between public investment and private investment in India. To this end, we employ the autoregressive distributed lag (ARDL) – bounds test approach, using data for the period 1980-81 to 2015-16. Finally, an error correction model is estimated to show the short-run dynamics along with the speed of adjustment to the equilibrium relationship among the variables. The estimated results suggest that public investment crowds in private investment in India. Furthermore, the speed of adjustment parameter indicates that adjustment process towards long run equilibrium is relatively high and CUSUM and CUSUMSQ tests confirmed that the models are stable over the sample period.

Suggested Citation

  • Anirudha Barik & Asit Ranjan Mohanty, 2019. "New evidence on the relationship between public and private investment in India," Economics Bulletin, AccessEcon, vol. 39(3), pages 1989-2001.
    • Handle: RePEc:ebl:ecbull:eb-19-00118
    as

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    References listed on IDEAS

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    Cited by:

    1. Nusrat Akber & Megha Gupta & Kirtti Ranjan Paltasingh, 2020. "The Crowding-in/ out Debate in Investments in India: Fresh Evidence from NARDL Application," South Asian Journal of Macroeconomics and Public Finance, , vol. 9(2), pages 167-189, December.

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    More about this item

    Keywords

    ARDL; Public Investment; Private Investment; India;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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