EconPapers    
Economics at your fingertips  
 

Impact of Public Debt, Deficit and Debt Financing on Private Investment in a Large Country: Evidence from the United States

Amir Kia ()
Additional contact information
Amir Kia: Finance and Economics Department, Utah Valley University

World Journal of Applied Economics, 2020, vol. 6, issue 2, 139-161

Abstract: This paper analyses the direct impact of fiscal variables on private investment. The current literature ignores one or more fiscal variables and, in many cases, the foreign financing of debt. In this paper, an aggregate investment function for an economy in which firms incur adjustment costs in their investment process is developed. The developed model incorporates the direct impact of government expenditure, public debt and investment, deficits and foreign-financed debt on private investment. The model is tested on US data. It is found that public investment does not have any impact on private investment, but government expenditure, deficit, debt and foreign-financed debt crowd out private investment over the long run. However, deficit crowds in the private investment over the short run.

Keywords: Private investment; Public debt; Deficit, Foreign-financed debt; Adjustment cost (search for similar items in EconPapers)
JEL-codes: H54 E13 E22 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://journal.econworld.org/index.php/econworld/article/view/149/57 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ana:journl:v:6:y:2020:i:2:p:139-161

DOI: 10.22440/wjae.6.2.3

Access Statistics for this article

World Journal of Applied Economics is currently edited by Unal Tongur

More articles in World Journal of Applied Economics from WERI-World Economic Research Institute Contact information at EDIRC.
Bibliographic data for series maintained by Unal Tongur ().

 
Page updated 2020-12-05
Handle: RePEc:ana:journl:v:6:y:2020:i:2:p:139-161