IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

The Dynamic Relationship Between Private Domestic Investment, the User Cost of Capital, Public Investment, Foreign Direct Investment and Economic Growth in Malaysia

Listed author(s):
  • Tan Bee Wah
  • Tang Chor Foon

This study attempts to examine the dynamic relationship between private domestic investment (PDI), the user cost of capital, public investment (PUB), FDI and economic growth in Malaysia over the period of 1970 to 2009. The Johansen cointegration test suggests that PDI, the user cost of capital, public investment, FDI and economic growth are cointegrated in Malaysia. The Granger causality test reveals that there is bi-directional causality between the variables in the long run. Meanwhile, there is strong evidence of bi-directional causality between PDI and economic growth. In addition, the user cost of capital, PUB and FDI show bi-directional causality with PDI and GDP in the short run. For completeness, generalised variance decomposition is also generated and the results suggest that PDI and FDI are more important than the user cost of capital and PUB in explaining the variation in economic growth. Finally, the generalised impulse response function confirms that a shock to the GDP, PUB and FDI exerts a positive effect on PDI, while the user cost capital exerts a negative effect on PDI in Malaysia.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers

File URL:
Download Restriction: no

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Società editrice il Mulino in its journal Economia politica.

Volume (Year): (2012)
Issue (Month): 2 ()
Pages: 221-246

in new window

Handle: RePEc:mul:jb33yl:doi:10.1428/37630:y:2012:i:2:p:221-246
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mul:jb33yl:doi:10.1428/37630:y:2012:i:2:p:221-246. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.