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Public Spending and Private Investment: Evidence From Greece

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  • E. C. Mamatzakis

Abstract

The aim of this paper is to investigate whether there is a link between disaggregated measures of government expenditures and private investment in Greece. A cointegration analysis of a multivariate system of equations is applied in order to empirically estimate the long run relationships between private investment and different measure of government expenditures. Subsequently IRF and VDC are estimated. Government investment is found to assert a positive effect on private investment, supporting in this way the capital accumulation process. On the other hand, government consumption appears to compete for the same resources with government investment, while it negatively affects private investment. [E62]

Suggested Citation

  • E. C. Mamatzakis, 2001. "Public Spending and Private Investment: Evidence From Greece," International Economic Journal, Taylor & Francis Journals, vol. 15(4), pages 33-46.
  • Handle: RePEc:taf:intecj:v:15:y:2001:i:4:p:33-46
    DOI: 10.1080/10168730100000051
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    References listed on IDEAS

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    1. Isabel Argimon & Jose Gonzalez-Paramo & Jose Roldan, 1997. "Evidence of public spending crowding-out from a panel of OECD countries," Applied Economics, Taylor & Francis Journals, vol. 29(8), pages 1001-1010.
    2. Barro, Robert J, 1981. "Output Effects of Government Purchases," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1086-1121, December.
    3. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    4. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-472, August.
    5. Buiter, Willem H., 1977. "`Crowding out' and the effectiveness of fiscal policy," Journal of Public Economics, Elsevier, vol. 7(3), pages 309-328, June.
    6. Erenburg, S. J. & Wohar, Mark E., 1995. "Public and private investment: Are there causal linkages?," Journal of Macroeconomics, Elsevier, vol. 17(1), pages 1-30.
    7. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    8. B. Kolluri & D. Giannaros & M. Panik & Mark Anderson, 1997. "Empirical analysis of the effects of government spending on private investment," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 3(1), pages 124-124, February.
    9. E. C. Mamatzakis, 1999. "Testing for long run relationship between infrastructure and private capital productivity: a time series analysis for the Greek industry," Applied Economics Letters, Taylor & Francis Journals, vol. 6(4), pages 243-246.
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    Cited by:

    1. Ghassan, Hassan B. & Alhajhoj, Hassan R., 2008. "ما هي طبيعة العلاقة بين الإنفاق الحكومي والإستثمار الخاص في الإقتصاد السعودي؟
      [What is the Nature of the Relationship between Government Spending and Private Investment in Saudi Arabia?]
      ," MPRA Paper 56377, University Library of Munich, Germany, revised 11 Jan 2009.

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