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Public-Private Investment Linkage in Pakistan

Author

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  • Abdul Rashid

    (Abdul Rashid is at the Institute of Business Management, Korangi Creek, Karachi-75190, Pakistan. E-mail: arahmad_pk@yahoo.com.)

Abstract

The link between public and private investment is investigated using annual data for the period 1964–65 to 2004–05. The estimates based on the structural cointegration approach indicate that both are cointegrated and public investment crowds in private investment. The study then used the McCabe et al. (2003) test to identify whether the existing cointegration vector is stationary or heteroscedastic. The findings of the analysis suggest that private investment can be enhanced by increasing public expenditure in infrastructure. The results of this study support the complementarity hypothesis, which states that stock of public capital crowds in private capital accumulation via increasing the return to private capital in private production technology.

Suggested Citation

  • Abdul Rashid, 2006. "Public-Private Investment Linkage in Pakistan," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 7(2), pages 219-230, September.
    • Handle: RePEc:sae:soueco:v:7:y:2006:i:2:p:219-230
    DOI: 10.1177/139156140600700204
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    References listed on IDEAS

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    Cited by:

    1. mashkoor, Aasim & ahmed, Ovais, 2015. "Theory of Economic Development (Pyramids of Economic Development)," MPRA Paper 63370, University Library of Munich, Germany.
    2. Mashkoor, Aasim & Ahmed, Ovais, 2015. "Theory of Economic Development (Secondary Stage)," MPRA Paper 63660, University Library of Munich, Germany.

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    More about this item

    Keywords

    JEL: C50; JEL: E22; JEL: E62; Structural Cointegration Analysis; KPSS Test; Public Investment; Private Investment;
    All these keywords.

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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