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Selected Macroeconomic Variables Affecting Private Investment in Malawi

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  • Assa, Maganga
  • Abdi, Edriss K.

Abstract

This study provides an empirical test of the macroeconomic variables that can potentially affect private investment decisions in Malawi in a short and long run perspective using time series data. Both the theory and the empirical literature are reviewed in order to identify a private investment function for the last three decades (1979-2009). The results reveal that investment decisions seem to be determined by public investment, bank credit to the private sector and the real interest rate in the short run. Besides, there is evidence of a crowding-out effect of public investment. In the long run, the capital accumulation path seems to be closely dependent on both GDP growth and real exchange rates.

Suggested Citation

  • Assa, Maganga & Abdi, Edriss K., 2012. "Selected Macroeconomic Variables Affecting Private Investment in Malawi," MPRA Paper 40698, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40698
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    File URL: https://mpra.ub.uni-muenchen.de/40698/3/MPRA_paper_40698.pdf
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    References listed on IDEAS

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    6. Stephen S. Everhart & Mariusz A. Sumlinski, 2001. "Trends in Private Investment in Developing Countries : Statistics for 1970-2000 and the Impact on Private Investment of Corruption and the Quality of Public Investment," World Bank Publications - Books, The World Bank Group, number 13989.
    7. Mr. Dhaneshwar Ghura, 1997. "Private Investment and Endogenous Growth: Evidence From Cameroon," IMF Working Papers 1997/165, International Monetary Fund.
    8. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
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    12. Mr. Christian H. Beddies, 1999. "Investment, Capital Accumulation, and Growth: Some Evidence from The Gambia 1964–98," IMF Working Papers 1999/117, International Monetary Fund.
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    Cited by:

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    More about this item

    Keywords

    Co-integration; Crowding-out; Error Correction Model; Malawi; Private investment;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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