The Crowding-in/ out Debate in Investments in India: Fresh Evidence from NARDL Application
Megha Gupta and
South Asian Journal of Macroeconomics and Public Finance, 2020, vol. 9, issue 2, 167-189
The purpose of the study is to re-examine the issue of the crowding-in/out effect of public investment on private investment by adopting an improved methodology of the â€˜nonlinear autoregressive distributive lagâ€™ (NARDL) model. Taking data from 1970 to 2016, the study finds that public investment crowds-in private investment both in the long-run as well as the short-run. However, the short-run elasticity is statistically more significant and larger in magnitude than the long-run elasticity. It has also been found that macroeconomic uncertainty significantly affects private investment both in the long-run and the short-run. Among other determinants of private investment, we observe foreign direct investment (FDI) inflow, credit flow to the private sector, household savings, real rate of interest and expected output affect private investment significantly. The policy implication of the study calls for the designing of public sector policies that enthuse more private investments. More credit flow to private sectors and FDI in different sectors of the economy should be prioritized. JEL Codes: E22, H54, C32
Keywords: Crowding-in/out; public investment; private investment; NARDL model; India (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:sae:smppub:v:9:y:2020:i:2:p:167-189
Access Statistics for this article
More articles in South Asian Journal of Macroeconomics and Public Finance
Bibliographic data for series maintained by SAGE Publications ().