Is private investment being crowded out in India? Some fresh evidence
We reexamine the crowding out hypothesis for India for the period 1970-71 to 2009-10. Applying a flexible accelerator model in a VECM framework, we find that government investment crowds out private investment in the long run while GDP has a significantly positive impact on the later. We also find that in the long run causality runs from public investment and GDP to private investment.
Volume (Year): 32 (2012)
Issue (Month): 2 ()
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- Chakraborty, Lekha S., 2006.
"Fiscal deficit, capital formation, and crowding out: Evidence from India,"
06/43, National Institute of Public Finance and Policy.
- Lekha S. Chakraborty, 2007. "Fiscal Deficit, Capital Formation, and Crowding Out : Evidence from India," Working Papers id:837, eSocialSciences.
- 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.
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