Investment, growth and employment: VECM for Uruguay

Lucía Ramírez and Gabriela Mordecki

No 14-07, Documentos de Trabajo (working papers) from Instituto de Economía - IECON

Abstract: Investment is a key to analyze an economy's growth, as its increase the economy productive capacity, either expanding the capital stock as incorporating new technology that makes the production process more efficient. In Uruguay, investment has substantially increased in recent years, both overall and sectoral. This would have occurred as a result of strong growth in the period, as well as government policies on investment promotion. Growth and investment evolution, together with employment, has undergone a long history in economic theory. In that sense, there are empirical studies that support the theory that investment precedes growth, while there are others that provide evidence to the hypothesis that growth determines investment. Through a model with vector error correction (VECM) we found a long-term relationship between GDP without primary activity, investment and urban workers of Uruguay. In this model we observe a positive relationship between GDP and the other two variables, where GDP precedes both urban workers and investment.

Keywords: investment; growth; employment; cointegration (search for similar items in EconPapers)
JEL-codes: B23 E22 F43 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2014-06
New Economics Papers: this item is included in nep-fdg, nep-gro and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ulr:wpaper:dt-07-14

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