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Modeling the Determinats of Domestic Private Investments in Ethiopia

  • Ambaye, Guesh Gebremeske
  • Berhanu, T.
  • Abera, G.
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    The study examined the determinants of domestic private investment in Ethiopia using a time series data over the period 1992-2010. The study employed an Autoregressive Distributed Lag (ARDL) model and applied the bounds test approach in modeling the long run determinants of domestic private investment. The study found exchange rate, domestic saving and domestic credit as key factors having negative and significant impact on domestic private investment. External debt and government expenditure are found to have significant and positive effect on domestic private investment. The results imply that government expenditure stimulates domestic private investment while domestic credit and domestic saving have a constrained effect on the sector.

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    File URL: http://purl.umn.edu/162240
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    Article provided by Czech University of Life Sciences Prague, Faculty of Economics and Management in its journal AGRIS on-line Papers in Economics and Informatics.

    Volume (Year): 5 (2013)
    Issue (Month): 4 (December)
    Pages:

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    Handle: RePEc:ags:aolpei:162240
    Contact details of provider: Postal: Kamycka 129, 165 21 Praha 6 - Suchdol
    Web page: http://online.agris.cz/
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    1. Domenico Giannone & Michele Lenza, 2010. "The Feldstein-Horioka Fact," NBER Chapters, in: NBER International Seminar on Macroeconomics 2009, pages 103-117 National Bureau of Economic Research, Inc.
    2. David Aschauer, 1988. "Does public capital crowd out private capital?," Staff Memoranda 88-10, Federal Reserve Bank of Chicago.
    3. Serven, Luis & Solimano, Andres, 1992. "Private Investment and Macroeconomic Adjustment: A Survey," World Bank Research Observer, World Bank Group, vol. 7(1), pages 95-114, January.
    4. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    5. Léonce Ndikumana & Sher Verick, 2008. "The Linkages Between FDI and Domestic Investment: Unravelling the Developmental Impact of Foreign Investment in Sub-Saharan Africa," Development Policy Review, Overseas Development Institute, vol. 26(6), pages 713-726, November.
    6. Borensztein, Eduardo, 1990. "Debt overhang, credit rationing and investment," Journal of Development Economics, Elsevier, vol. 32(2), pages 315-335, April.
    7. Stockman, Alan C., 1981. "Anticipated inflation and the capital stock in a cash in-advance economy," Journal of Monetary Economics, Elsevier, vol. 8(3), pages 387-393.
    8. Joshua Greene & Delano Villanueva, 1991. "Private Investment in Developing Countries: An Empirical Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 38(1), pages 33-58, March.
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