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What Influences Private Investment? The Case of the Czech Republic

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  • Martin Gurtler

Abstract

What influences private investment in the Czech Republic? This paper arrives at a conclusion based on a survey of fixed-asset purchases in 30,000 non-financial corporations over the period 2008-2015. BVAR models are estimated on aggregates for 19 industries and the whole non-financial economy. As our results show, foreign demand is the most important factor for Czech business investment, especially in manufacturing and tourism. We also find an increased importance of expectations and uncertainty during the period under review. According to our findings, business investment is fostered by a devalued currency and is crowded out by public investment. The most profound crowding-out was seen in manufacturing and agriculture, whereas services, trade, and construction exhibit crowding-in. Finally, EU funds are found to be successful in providing occasional support to private investment.

Suggested Citation

  • Martin Gurtler, 2018. "What Influences Private Investment? The Case of the Czech Republic," Working Papers 2018/14, Czech National Bank.
    • Handle: RePEc:cnb:wpaper:2018/14
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    References listed on IDEAS

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    More about this item

    Keywords

    Bayesian VAR; crowding-out; Czech Republic; EU funds; exchange rate; interest rate; investment; monetary and fiscal policy; survey data; uncertainty;
    All these keywords.

    JEL classification:

    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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