IDEAS home Printed from https://ideas.repec.org/a/sae/mareco/v4y2010i1p79-100.html
   My bibliography  Save this article

An Econometric Analysis of Investment Spending of a Sub-national Government in India

Author

Listed:
  • Bimal K. Mohanty

    (Professor of Economics, Gangadhar Meher (Autonomous) College, Sambalpur-768 004 Orissa; e-mail: mohanty_bimal@indiatimes.com)

Abstract

Investment spending of a sub-national government in India is equated with its capital expenditure. This article analyses spending by the state government of Orissa. Inadequate provision of physical infrastructure has been a primary cause of poverty and unemployment in the state. Government investment expenditure is unavoidable for the creation of physical infrastructure in a state like Orissa and thereby it works as a feeder for increasing gross state domestic product and employment in private sector of the state economy. For a substantive empirical attestation of the proposition, an econometric exercise has been accomplished. Several tools from time-series econometrics have been used starting with causality and finally vector auto-regression (VAR) modelling. The econometric tools that have been used in this article conform rather than conflict with the conclusion reached at each stage. Such agreement is suggestive of the efficacy of the final results derived from the study.

Suggested Citation

  • Bimal K. Mohanty, 2010. "An Econometric Analysis of Investment Spending of a Sub-national Government in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(1), pages 79-100, January.
    • Handle: RePEc:sae:mareco:v:4:y:2010:i:1:p:79-100
    DOI: 10.1177/097380100900400104
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/097380100900400104
    Download Restriction: no
    File URL: https://libkey.io/10.1177/097380100900400104?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Aryeetey, Ernest. & Baah-Boateng, W., 2007. "Growth, investment and employment in Ghana," ILO Working Papers 993979333402676, International Labour Organization.
    2. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, December.
    3. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    4. Reino Hjerppe & Pellervo Hämäläinen & Jaakko Kiander & Matti Viren, 2007. "Do government expenditures increase private sector productivity?," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 34(5), pages 345-360, April.
    5. Taylor, John B, 1979. "Estimation and Control of a Macroeconomic Model with Rational Expectations," Econometrica, Econometric Society, vol. 47(5), pages 1267-1286, September.
    6. repec:ilo:ilowps:397933 is not listed on IDEAS
    7. Narayan, Paresh Kumar, 2004. "Do public investments crowd out private investments? Fresh evidence from Fiji," Journal of Policy Modeling, Elsevier, vol. 26(6), pages 747-753, September.
    8. Sargent, Thomas J & Wallace, Neil, 1975. ""Rational" Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 241-254, April.
    9. Ribeiro, Marcio Bruno & Teixeira, Joanílio Rodolpho, 2001. "An econometric analysis of private-sector investment in Brazil," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    10. David Alan Aschauer, 1989. "Back of the G-7 pack: public investment and productivity growth in the Group of Seven," Working Paper Series, Macroeconomic Issues 89-13, Federal Reserve Bank of Chicago.
    11. Barro, Robert J, 1978. "Unanticipated Money, Output, and the Price Level in the United States," Journal of Political Economy, University of Chicago Press, vol. 86(4), pages 549-580, August.
    12. Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-334, June.
    13. Aschauer, David Alan, 1989. "Does public capital crowd out private capital?," Journal of Monetary Economics, Elsevier, vol. 24(2), pages 171-188, September.
    14. Pradhan, B. K. & Ratha, D. K. & Sarma, Atul, 1990. "Complementarity between public and private investment in India," Journal of Development Economics, Elsevier, vol. 33(1), pages 101-116, July.
    15. William E. Cullison, 1993. "Public investment and economic growth," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 19-34.
    16. von Furstenberg, George M & Malkiel, Burton G, 1977. "The Government and Capital Formation: A Survey of Recent Issues," Journal of Economic Literature, American Economic Association, vol. 15(3), pages 835-878, September.
    17. Lucas, Robert E, Jr, 1975. "An Equilibrium Model of the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1113-1144, December.
    18. Bimal K Mohanty & Trilochan Tripathy, 2005. "Money, Output and Price Behavior in India Under Reforms: Some Empirical Evidence," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(4), pages 56-70, November.
    19. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kevin D. Hoover & Òscar Jordà, 2001. "Measuring systematic monetary policy," Review, Federal Reserve Bank of St. Louis, vol. 83(Jul), pages 113-144.
    2. Gauger, Jean Ann, 1984. "Three essays on the neutrality of anticipated money growth," ISU General Staff Papers 198401010800008758, Iowa State University, Department of Economics.
    3. Kevin D. Hoover & Òscar Jordà, 2001. "Measuring systematic monetary policy," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 113-144.
    4. Bashir Olayinka Kolawole, 2016. "Government Spending and Inclusive-Growth Relationship in Nigeria: An Empirical Investigation," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 19(2), pages 33-56, November.
    5. John B. Taylor, 1983. "Rational Expectations Models in Macroeconomics," NBER Working Papers 1224, National Bureau of Economic Research, Inc.
    6. Peter Nijkamp & Jacques Poot, Victoria, 2002. "Meta-Analysis of the Impact of Fiscal Policies on Long-Run Growth," Tinbergen Institute Discussion Papers 02-028/3, Tinbergen Institute, revised 23 Apr 2003.
    7. Nijkamp, Peter & Poot, Jacques, 2004. "Meta-analysis of the effect of fiscal policies on long-run growth," European Journal of Political Economy, Elsevier, vol. 20(1), pages 91-124, March.
    8. Schreiner, Lena & Madlener, Reinhard, 2022. "Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany," Energy Economics, Elsevier, vol. 107(C).
    9. Bierens, H.J. & Broersma, L., 1991. "The relation between unemployment and interest rate : some international evidence," Serie Research Memoranda 0112, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    10. Bennet T. McCallum, 1984. "A Linearized Version of Lucas's Neutrality Model," Canadian Journal of Economics, Canadian Economics Association, vol. 17(1), pages 138-145, February.
    11. Mulder, C.B., 1986. "Testing Korteweg's rational expectations model for a small open economy," Other publications TiSEM c52e6c80-834d-49c7-ae6a-b, Tilburg University, School of Economics and Management.
    12. Ali F. Darrat, 1985. "Does Anticipated Fiscal Policy Matter? The Italian Evidence," Public Finance Review, , vol. 13(3), pages 339-352, July.
    13. Diego Martinez-Lopez, 2006. "Linking Public Investment to Private Investment. The Case of Spanish Regions," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(4), pages 411-423.
    14. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777.
    15. Atıcı, Ferhan M. & Ekiz, Funda & Lebedinsky, Alex, 2014. "Cagan type rational expectation model on complex discrete time domains," European Journal of Operational Research, Elsevier, vol. 237(1), pages 148-151.
    16. Sajad Ahmad Bhat & Javed Ahmad Bhat & Taufeeq Ajaz, 2020. "The Public–Private Investment Nexus In India: Evidence From A Policy Simulation Approach," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(224), pages 101-128, January –.
    17. Atif Ansar & Bent Flyvbjerg & Alexander Budzier & Daniel Lunn, 2016. "Does infrastructure investment lead to economic growth or economic fragility? Evidence from China," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 32(3), pages 360-390.
    18. Poot, Jacques, 1999. "A meta-analytic study of the role of government in long-run economic growth," ERSA conference papers ersa99pa171, European Regional Science Association.
    19. Ahmed, Riaz, 2016. "Social infrastructure and productivity of manufacturing firms: Evidence from Pakistan," ZEW Discussion Papers 16-038, ZEW - Leibniz Centre for European Economic Research.
    20. Fernando Barreiro-Pereira, 2004. "Spatial effects on technical progress: growth, and convergence among countries," ERSA conference papers ersa04p278, European Regional Science Association.

    More about this item

    Keywords

    Capital Expenditure; Crowding Out; Crowding In; Theory of Social Balance; Human Capital; Causality; Stationarity Test; Dickey-Fuller Test; Box-Jenkins Methodology; Error-Correction Mechanism; Vector Auto-regression (VAR) Modelling; JEL Classification: H72;
    All these keywords.

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:mareco:v:4:y:2010:i:1:p:79-100. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.ncaer.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.