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The impact of public investment on private investment spending in Latin America: 1980–95

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  • Miguel Ramirez

Abstract

This paper investigates the theoretical and empirical links between key economic variables and private spending in Latin America during 1980 to 1995. The empirical findings of this paper directly address the complementarity hypothesis which suggests that increases in public investment spending raise the marginal productivity of private capital, thereby inducing higher rates of private investment spending. This paper also addresses the issue of whether changes in the real exchange rate (expenditure-switching policies) have a deflationary effect on the economics of Latin America. The findings in this paper make an important contribution to the ongoing debate about which policies need to be promoted to raise and sustain the rate of private capital formation in Latin America—the region's future source of employment and income creation. Copyright International Atlantic Economic Society 2000

Suggested Citation

  • Miguel Ramirez, 2000. "The impact of public investment on private investment spending in Latin America: 1980–95," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 28(2), pages 210-225, June.
  • Handle: RePEc:kap:atlecj:v:28:y:2000:i:2:p:210-225
    DOI: 10.1007/BF02298362
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    Citations

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    Cited by:

    1. Sallahuddin Hassan & Zalila Othman & Mohd Zaini Abd Karim, 2011. "Private and Public Investment in Malaysia: A Panel Time-Series Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 1(4), pages 199-210.
    2. Ghassan, Hassan B., 2011. "Public and Private Investment in Saudi Economy: Evidence from Weak Exogeneity and Bound Cointegration Tests," MPRA Paper 56537, University Library of Munich, Germany.
    3. Omar A Mendoza Lugo, 2008. "The differential impact of real interest rates and credit availability on private investment: evidence from Venezuela," BIS Papers chapters,in: Bank for International Settlements (ed.), Transmission mechanisms for monetary policy in emerging market economies, volume 35, pages 501-537 Bank for International Settlements.
    4. Alberto Bucci & Chiara Del Bo, 2009. "On the interaction between public investment and private capital in economic growth," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1092, Universitá degli Studi di Milano.
    5. Solarin, Sakiru Adebola & Shahbaz, Muhammad, 2015. "Natural gas consumption and economic growth: The role of foreign direct investment, capital formation and trade openness in Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 835-845.
    6. 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).
    7. Agénor, Pierre-Richard & Bayraktar, Nihal & El Aynaoui, Karim, 2008. "Roads out of poverty? Assessing the links between aid, public investment, growth, and poverty reduction," Journal of Development Economics, Elsevier, vol. 86(2), pages 277-295, June.
    8. repec:mje:mjejnl:v:11:y:2015:i:2:p:49-64 is not listed on IDEAS
    9. Bank for International Settlements, 2008. "Transmission mechanisms for monetary policy in emerging market economies," BIS Papers, Bank for International Settlements, number 35.
    10. Alberto Bucci & Chiara Del Bo, 2012. "On the interaction between public and private capital in economic growth," Journal of Economics, Springer, vol. 106(2), pages 133-152, June.
    11. Sakib Mahmud & Gazi Mainul Hassan, 2014. "Consequences of Public Programs and Private Transfers on Household Investment in Storm Protection," Working Papers in Economics 14/01, University of Waikato.
    12. Miguel Ramirez & Zsófia Kőműves, 2014. "Economic Infrastructure, Private Capital Formation, and FDI Inflows to Hungary: A Unit Root and Cointegration Analysis with Structural Breaks," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(4), pages 367-382, December.
    13. International Monetary Fund, 2008. "Benin; Selected Issues and Statistical Appendix," IMF Staff Country Reports 08/84, International Monetary Fund.
    14. Ghassan, Hassan B. & AlDehailan, Salman, 2009. "اختبار التكامل المشترك غير الخطي بين الاستثمار الحكومي والاستثمار الخاص في الاقتصاد السعودي
      [Test of Non Linear Cointegration between Government Investment and Private Investment in Saudi Arabia Ec
      ," MPRA Paper 56376, University Library of Munich, Germany, revised 04 Dec 2009.
    15. Miguel Ramirez, 2013. "Is Foreign Direct Investment Beneficial for Mexico? A Cointegration Analysis, 1958-2010," Working Papers 1311, Trinity College, Department of Economics.
    16. Ramirez, Miguel D., 2007. "Is Foreign Direct Investment Productive in the Latin America Case? A Panel Unit Root and Panel Cointegration Analysis, 1980-2001," Working Papers 23, Yale University, Department of Economics.
    17. Ramirez, Miguel D., 2006. "Is foreign direct investment beneficial for Mexico? An empirical analysis, 1960-2001," World Development, Elsevier, vol. 34(5), pages 802-817, May.

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