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The determinants of private investment in a mining export economy. Peru: 1997-2017

Author

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  • Waldo Mendoza Bellido

    (Departamento de Economía de la Pontificia Universidad Católica del Perú)

  • Erika Collantes Goicochea

    (Departamento de Economía de la Pontificia Universidad Católica del Perú)

Abstract

Peru is an economy where about 60 percent of exports are mineral, of which copper, in turn, represents half. What is the weight of international factors and domestic factors in determining private investment in this mining export economy? In this paper, we identify the dominant influence of international conditions on the evolution of private investment in Peru, as well as the enormous individual weight of the price of exports in this evolution. In the period 1997-2017, external factors explained 54, 64 and 44 percent of the variance in the growth rate of total private investment, mining investment, and non-mining investment, respectively; while more than half of the weight of external factors was explained by the price of exports. On the other hand, internal factors explained 46, 36 and 56 percent of the variance in the growth rate of total private investment, mining investment. and non-mining investment; while about 40 percent of the weight of domestic factors was explained by public investment. These findings are important because they show the price of exports to be the main channel connecting private investment in Peru with the world economy, and public investment as the most effective policy variable affecting it. JEL Classification-JEL: C32 , E22 , E32 , H54 , L72 , L74

Suggested Citation

  • Waldo Mendoza Bellido & Erika Collantes Goicochea, 2018. " The determinants of private investment in a mining export economy. Peru: 1997-2017," Documentos de Trabajo / Working Papers 2018-463, Departamento de Economía - Pontificia Universidad Católica del Perú.
  • Handle: RePEc:pcp:pucwps:wp00463
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    File URL: http://files.pucp.edu.pe/departamento/economia/DDD463.pdf
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    References listed on IDEAS

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    1. Marianne Baxter & Robert G. King, 1999. "Measuring Business Cycles: Approximate Band-Pass Filters For Economic Time Series," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 575-593, November.
    2. Waldo Mendoza Bellido & Erika Collantes Goicochea, 2017. " La economía de PPK. Promesas y resultados: la distancia que los separa," Documentos de Trabajo / Working Papers 2017-440, Departamento de Economía - Pontificia Universidad Católica del Perú.
    3. Jorge Fornero & Markus Kirchner & Andrés Yany, 2015. "Terms of Trade Shocks and Investment in Commodity-Exporting Economies," Central Banking, Analysis, and Economic Policies Book Series,in: Rodrigo Caputo & Roberto Chang (ed.), Commodity Prices and Macroeconomic Policy, edition 1, volume 22, chapter 5, pages 135-193 Central Bank of Chile.
    4. Pindyck, Robert S, 1991. "Irreversibility, Uncertainty, and Investment," Journal of Economic Literature, American Economic Association, vol. 29(3), pages 1110-1148, September.
    5. Waldo Mendoza, 2015. "Macroeconomía intermedia para América Latina," Libros PUCP / PUCP Books, Fondo Editorial - Pontificia Universidad Católica del Perú, edition 2, number lde-2015-01.
    6. Lawrence J. Christiano & Terry J. Fitzgerald, 2003. "The Band Pass Filter," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 435-465, May.
    7. Ben S. Bernanke, 1983. "Irreversibility, Uncertainty, and Cyclical Investment," The Quarterly Journal of Economics, Oxford University Press, vol. 98(1), pages 85-106.
    8. Nicolas E Magud & Sebastian Sosa, 2015. "Investment in Emerging Markets We Are Not in Kansas Anymore…Or Are We?," IMF Working Papers 15/77, International Monetary Fund.
    9. repec:pcp:pucotr:otr-2017-07 is not listed on IDEAS
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    More about this item

    Keywords

    Decomposition of Variance; Historical Decomposition; Fluctuaciones; Impulse-response; Private Mining Investment; non-mining private investment; Total private investment; Public investment ; Export price;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction

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