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Did public investment crowd out private investment in India?

Author

Listed:
  • Honey Karun

    (International Monetary Fund)

  • Hrishikesh Vinod

    (Fordham University)

  • Chakraborty, Lekha S.

    (National Institute of Public Finance and Policy)

Abstract

Our paper uses the ME (Maximum Entropy) bootstrap method to overcome the econometric constraints of using a short time series after the publication of a new macroeconomic series in India. We use a short time series (quarterly data) of stationary and nonstationary variables between 2011-2016 to confirm the positive role of public infrastructure investment. The significant result has policy implications in terms of the current debate, whether public investment `crowds-in' rather than `crowds-out' private corporate investment in India.

Suggested Citation

  • Honey Karun & Hrishikesh Vinod & Chakraborty, Lekha S., 2020. "Did public investment crowd out private investment in India?," Working Papers 20/312, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:20/312
    Note: Working Paper 312, 2020
    as

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    References listed on IDEAS

    as
    1. Chakraborty, Lekha S., 2006. "Fiscal deficit, capital formation, and crowding out: Evidence from India," Working Papers 06/43, National Institute of Public Finance and Policy.
    2. Pradyumna Dash, 2016. "The Impact of Public Investment on Private Investment: Evidence from India," Vikalpa: The Journal for Decision Makers, , vol. 41(4), pages 288-307, December.
    3. Sacchidananda Mukherjee, 2020. "Goods and Services Tax efficiency across Indian States: panel stochastic frontier analysis," Indian Economic Review, Springer, vol. 55(2), pages 225-251, December.
    4. Bahal, Girish & Raissi, Mehdi & Tulin, Volodymyr, 2018. "Crowding-out or crowding-in? Public and private investment in India," World Development, Elsevier, vol. 109(C), pages 323-333.
    5. Hrishikesh D. Vinod, 2013. "Maximum Entropy Bootstrap Algorithm Enhancements," Fordham Economics Discussion Paper Series dp2013-04, Fordham University, Department of Economics.
    6. Chhibber, Ajay & Kalloor, Akshata, 2016. "Reviving Private Investment in India: Determinants and Policy Levers," Working Papers 16/181, National Institute of Public Finance and Policy.
    7. Shah, Ajay, 2020. "Responding to the new coronavirus: An Indian policy perspective," Working Papers 20/309, National Institute of Public Finance and Policy.
    8. Lekha Chakraborty, 2007. "Fiscal Deficit, Capital Formation, and Crowding Out in India: Evidence from an Asymmetric VAR Model," Economics Working Paper Archive wp_518, Levy Economics Institute.
    9. Vinod, Hrishikesh D. & Lopez-de-Lacalle, Javier, 2009. "Maximum Entropy Bootstrap for Time Series: The meboot R Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 29(i05).
    10. Pandey, Rita & Gupta, Manish & Sachdeva, Paavani & Singh, Abhishek, 2020. "Biodiversity Conservation in India: Mapping Key Sources and Quantum of Funds," Working Papers 20/311, National Institute of Public Finance and Policy.
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    Cited by:

    1. Honoré S. Houngbedji & Nassibou Bassongui, 2021. "Investissement Public et Investissement Privé en Afrique Subsaharienne: Rôle de la Qualité Institutionnelle," African Development Review, African Development Bank, vol. 33(3), pages 466-478, September.
    2. Choudhury, Mita & Dubey, Jay Dev, 2020. "Equity in Intra-State Distribution of Public Spending on Health: The Case of Bihar and Tamil Nadu," Working Papers 20/315, National Institute of Public Finance and Policy.
    3. Chakraborty, Lekha S. & Thomas, Emmanuel & Gandhi, Piyush, 2020. "Natural Resources Revenue Buoyancy in India: Empirical Evidence From State-specific Mining Regime," Working Papers 20/313, National Institute of Public Finance and Policy.

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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