Investigating Causal Relations between Fixed Investment and Economic Growth

Abdulnasser Hatemi-J and Manucherhr Irandoust ()
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Manucherhr Irandoust: Örebro University Department of Economics, Postal: Örebro University, Swedish Business School, SE - 701 82 Örebro,, Sweden, http://www.oru.se/

Economia Internazionale / International Economics, 2002, vol. 55, issue 1, 25-35

Abstract: Few studies in the literature have dealt with the causality between fixed investment and economic growth. This study investigates the causal nexus of fixed investment and economic growth for a number of industrialized countries by constructing a vector autoregression (VAR) model for each country. On the basis of the new Granger non-causality procedure developed by Toda and Yamamoto (1995), the results show that fixed investment and economic growth are causally related in the long run for each country. In Canada and Italy the flow of causality is found to be bidirectional, in Germany the flow of causality is running in only one direction from fixed investment to economic growth, while in the remaining countries, France, Sweden, and the UK causality is running from growth to fixed investment.

Keywords: Fixed investment; economic growth; Granger non-causality; modified Wald’s test. (search for similar items in EconPapers)
JEL-codes: C32 O16 O57 (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:0195

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