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Bound Cointegration Test on Private Investment’s Equation: Evidence from Saudi Economy

Author

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  • Hassan B. GHASSAN
  • Hassan R. ALHAJHOJ

Abstract

This paper investigates the long-run equilibrium relationship between the real private and public investment in Saudi Arabia by using ARDL cointegration tests. The finding shows the stable long-run relation between private investment and public investment. The results indicate that the disequilibrium is largely corrected and converges back to the equilibrium in one year and four months, with a speed of adjustment at rate of about 75 per cent a year.This result supports that the Saudi economy is resilient against the shocks.

Suggested Citation

  • Hassan B. GHASSAN & Hassan R. ALHAJHOJ, 2012. "Bound Cointegration Test on Private Investment’s Equation: Evidence from Saudi Economy," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(1).
  • Handle: RePEc:eaa:aeinde:v:12:y:2012:i:1_10
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    References listed on IDEAS

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    More about this item

    Keywords

    Private Investment; Public Investment; ARDL Cointegration; Saudi Arabia;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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