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الارتباط الحركي بين الاستثمار في مؤسسات القطاع الحكومي والاستثمار الخاص عبر نموذج التقهقر الذاتي البنيوي: حالة الاقتصاد السعودي
[The Dynamic Relationship between the Investment in Public and Private Sectors Using an SVAR Model: Case of Saudi Arabia]

Author

Listed:
  • Ghassan, Hassan
  • Alhajhoj, Hassan

Abstract

The purpose of this paper is to analyze the relationship between investment in public sector institutions and private investment in the Saudi economy by using Structural VAR model for testing the dynamic crowding-out effect during the last four decades. Three fundamental variables are mobilized: the GDP, public investment and private investment. The linear relationship between structural shocks, which have an economic and financial interpretation, and the reduced random residuals has been established to evaluate the dynamic impacts. The findings show that the investment of the public sector institutions has an impact on the investment of private sector, and that the impulse response functions to the supply and demand shocks indicate that the crowding-out effect is verified in the short and long run.

Suggested Citation

  • Ghassan, Hassan & Alhajhoj, Hassan, 2010. "الارتباط الحركي بين الاستثمار في مؤسسات القطاع الحكومي والاستثمار الخاص عبر نموذج التقهقر الذاتي البنيوي: حالة الاقتصاد السعودي
    [The Dynamic Relationship between the Investment in Public and Privat
    ," MPRA Paper 54398, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:54398
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    References listed on IDEAS

    as
    1. António Afonso & Miguel St. Aubyn, 2009. "Macroeconomic Rates Of Return Of Public And Private Investment: Crowding-In And Crowding-Out Effects," Manchester School, University of Manchester, vol. 77(s1), pages 21-39, September.
    2. António Afonso & Ricardo M. Sousa, 2012. "The macroeconomic effects of fiscal policy," Applied Economics, Taylor & Francis Journals, vol. 44(34), pages 4439-4454, December.
    3. Lekha Chakraborty, 2007. "Fiscal Deficit, Capital Formation, and Crowding Out in India: Evidence from an Asymmetric VAR Model," Economics Working Paper Archive wp_518, Levy Economics Institute.
    4. Erdal Atukeren, 2005. "Interactions Between Public and Private Investment: Evidence from Developing Countries," Kyklos, Wiley Blackwell, vol. 58(3), pages 307-330, July.
    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. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1329-1368.
    8. Pritha Mitra, 2006. "Has Government Investment Crowded Out Private Investment in India?," American Economic Review, American Economic Association, vol. 96(2), pages 337-341, May.
    9. Voss, Graham M., 2002. "Public and private investment in the United States and Canada," Economic Modelling, Elsevier, vol. 19(4), pages 641-664, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Investment; Private sector; Public sector; SVAR model; Saudi Arabia;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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