Investment, growth and employment: VECM for Uruguay
AbstractInvestment is a key to analyze an economy’s growth, as its increase the economy productive capacity, either expanding the capital stock as incorporating new technology that makes the production process more efficient. In Uruguay, investment has substantially increased in recent years, both overall and sectoral. This would have occurred as a result of strong growth in the period, as well as government policies on investment promotion. Growth and investment evolution, together with employment, has undergone a long history in economic theory. In that sense, there are empirical studies that support the theory that investment precedes growth, while there are others that provide evidence to the hypothesis that growth determines investment. Through a model with vector error correction (VECM) we found a long-term relationship between GDP without primary activity, investment and urban workers of Uruguay. In this model we observe a positive relationship between GDP and the other two variables, where GDP precedes both urban workers and investment.
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Bibliographic InfoPaper provided by Instituto de Economía - IECON in its series Documentos de Trabajo (working papers) with number 14-07.
Length: 21 pages
Date of creation: Jun 2014
Date of revision:
investment; growth; employment; cointegration;
Find related papers by JEL classification:
- B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-06-22 (All new papers)
- NEP-FDG-2014-06-22 (Financial Development & Growth)
- NEP-GRO-2014-06-22 (Economic Growth)
- NEP-MAC-2014-06-22 (Macroeconomics)
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