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The Causal Relationship between Private and Public Investment in Zimbabwe

Author

Listed:
  • Muyambiri, Brian
  • Chiwira, Oscar
  • Enowbi Batuo, Michael
  • Chiranga, Ngonidzashe

Abstract

The study examines the relationship between private and public investment in Zimbabwe utilizing yearly time series data for the period 1970 to 2007. Emphasis is placed on the direction of causality and the effect of the two types of investment on each other. The paper constructs empirical models for both private and public investment, based on the flexible accelerator theory. Private investment is found to be cointegrated with public investment. A cointergration approach and VEC model are employed to assess the short run relationship existing between public and private investment. The relationship between private and public investment is found to be insignificant and the direction of causality found to be unidirectional. The results support the notion that private investment precedes public investment.

Suggested Citation

  • Muyambiri, Brian & Chiwira, Oscar & Enowbi Batuo, Michael & Chiranga, Ngonidzashe, 2010. "The Causal Relationship between Private and Public Investment in Zimbabwe," MPRA Paper 26671, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:26671
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    File URL: https://mpra.ub.uni-muenchen.de/26671/1/MPRA_paper_26671.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Private Investment; Public Investment; Causality; Flexible Accelerator Theory; Zimbabwe;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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