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Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector-level evidence

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  • Leonce Ndikumana

    (University of Massachusetts, Amherst, USA)

Abstract

This study explores the determinants of investment using both aggregated industry-level data and disaggretated data on 27 sub-sectors of the manufacturing sector for the period 1970-2001. According to the results in this study, the government has potentially powerful means at its disposal to stimulate private investment. In particular, a domestic demand stimulus and public investment expansion will produce large gains in private investment. While the direct effects of lowering the interest rate appear to be quantitatively small, indirect effects operating notably through domestic demand and cheaper credit are likely to be large. The evidence in this study also indicates that it is important to minimise exchange rate instability to encourage investment. Copyright © 2008 John Wiley & Sons, Ltd.

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  • Leonce Ndikumana, 2008. "Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector-level evidence," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(7), pages 869-887.
    • Handle: RePEc:wly:jintdv:v:20:y:2008:i:7:p:869-887
    DOI: 10.1002/jid.1465
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    7. Jiangyi Qi, 2016. "Fiscal Expenditure Incentives, Spatial Correlation and Quality of Economic Growth: Evidence from a Chinese Province," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(7), pages 191-191, June.

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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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