Effect of Government Spending and Macro-Economic Uncertainty on Private Investment in Services Sector: Evidence from Pakistan
This study examines the effect of government spending and macroeconomic uncertainty on private fixed investment in services sector of the Pakistan for the period from 1972 to 2005. We first investigated time series properties of data then estimated long run model using cointegration technique. The results show that government spending and interest rate affect private investment in services sector in Pakistan. The preferred short-run dynamic investment function indicates that increase in government current spending and interest rate discourages private investment and similarly macroeconomic instability and uncertainty affect the private investment negatively.
|Date of creation:||Aug 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, volume 1, number 5474.
- Pindyck, Robert S., 1993.
"Investments of uncertain cost,"
Journal of Financial Economics,
Elsevier, vol. 34(1), pages 53-76, August.
- Imtiaz Ahmed & Abdul Qayyum, 2007. "Do Public Expenditure and Macroeconomic Uncertainty Matter to Private Investment? Evidence from Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(2), pages 145-161.
- Joshua Greene & Delano Villanueva, 1991. "Private Investment in Developing Countries: An Empirical Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 38(1), pages 33-58, March.
- AsHFAQUE H KHAN, 1988. "Macroeconomic Policy and Private Investment in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 27(3), pages 278-291.
- Looney, Robert E., 1997. "Infrastructure and private sector investment in Pakistan," Journal of Asian Economics, Elsevier, vol. 8(3), pages 393-420.
- Pindyck, Robert S, 1991.
"Irreversibility, Uncertainty, and Investment,"
Journal of Economic Literature,
American Economic Association, vol. 29(3), pages 1110-48, September.
- Robert S. Pindyck, 1990. "Irreversibility, Uncertainty, and Investment," NBER Working Papers 3307, National Bureau of Economic Research, Inc.
- Pindyck, Robert S., 1990. "Irreversibility, uncertainty, and investment," Working papers 3137-90., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Pindyck, Robert, 1989. "Irreversibility, uncertainty, and investment," Policy Research Working Paper Series 294, The World Bank.
- Serven, Luis & Solimano, Andres, 1993. "Debt crisis, adjustment policies and capital formation in developing countries: Where do we stand?," World Development, Elsevier, vol. 21(1), pages 127-140, January.
- David Stasavage, 2000. "Private Investment and Political Uncertainty," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 25, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- George, Anita & Morisset, Jacques & DEC, 1993. "Does price uncertainty really reduce private investment? A small model applied to Chile," Policy Research Working Paper Series 1114, The World Bank.
- Shafik, Nemat & Shafik, Nemat, 1992. "Modeling private investment in Egypt," Journal of Development Economics, Elsevier, vol. 39(2), pages 263-277, October.
- Dhaneshwar Ghura & Barry Goodwin, 2000. "Determinants of private investment: a cross-regional empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 32(14), pages 1819-1829.
- Serven, Luis & Solimano, Andres, 1991. "Adjustment policies and investment performance in developing countries : theory, country experiences, and policy implications," Policy Research Working Paper Series 606, The World Bank.
- Schwert, G. William, 1987. "Effects of model specification on tests for unit roots in macroeconomic data," Journal of Monetary Economics, Elsevier, vol. 20(1), pages 73-103, July.
- Serven, Luis, 2002. "Real exchange rate uncertainty and private investment in developing countries," Policy Research Working Paper Series 2823, The World Bank.
- Abdul Rashid, 2005. "Public / Private Investment Linkages: A Multivariate Cointegration Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(4), pages 805-817.
- Mehdi S. Monadjemi, 1996. "Public Expenditure And Private Investment: A Study of Three OECD Countries," Studies in Economics 9601, School of Economics, University of Kent.
- Hendry, David F. & Richard, Jean-Francois, 1982. "On the formulation of empirical models in dynamic econometrics," Journal of Econometrics, Elsevier, vol. 20(1), pages 3-33, October.
- Oshikoya, Temitope W, 1994. "Macroeconomic Determinants of Domestic Private Investment in Africa: An Empirical Analysis," Economic Development and Cultural Change, University of Chicago Press, vol. 42(3), pages 573-96, April.
- Pereira, Alfred M. & Roca-Sagales, Oriol, 2001. "Infrastructures and private sector performance in Spain," Journal of Policy Modeling, Elsevier, vol. 23(4), pages 371-384, May.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:11673. 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.