Public And Private Capital Formation And Economic Growth In Malaysia, 1961-1995
This paper analyzes the productivity of public and private capital formation in a developing economy, Malaysia, using annual data from 1961 to 1995. The analysis is based on neoclassical growth regression, where the transition to the steady-state level of income per capita is modeled using an error correction framework. The results suggest that the public investment has been unproductive over the periods under consideration. Consistent with existing empirical studies, the private investment rate and the export performance of the country are positively related to economic growth. Our results call for a reduction in the public capital formation. However, for this recommendation to be more convincing, we believe that further analyses are much needed to examine which types of public capital are unproductive.
Volume (Year): 8 (2000)
Issue (Month): 1 (June)
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- John A. Tatom, 1991. "Public capital and private sector performance," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-15.
- Roberto Cellini, 1997. "Growth empirics: evidence from a panel of annual data," Applied Economics Letters, Taylor & Francis Journals, vol. 4(6), pages 347-351.
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"Understanding spurious regressions in econometrics,"
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Elsevier, vol. 33(3), pages 311-340, December.
- Peter C.B. Phillips, 1985. "Understanding Spurious Regressions in Econometrics," Cowles Foundation Discussion Papers 757, Cowles Foundation for Research in Economics, Yale University.
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