A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe

Ganić, Mehmed; Hodžić, Lejla; Riđić, Ognjen

doi:10.17535/crorr.2021.0008

Cited by 3 publications

(3 citation statements)

References 27 publications

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“…The results for the heterogeneous settings of the underlying data, as described in Model 3 (8), are shown in Table 3. In the case of these heterogeneous scenarios, only the powers are calculated, as the concept of size is not meaningful.…”

Section: Llcmentioning

confidence: 99%

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A Monte Carlo study on the size and power of panel unit root tests

Mravak

2023

Croat. oper. res. rev. (Online)

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The aim of this paper is to explore the properties of various panel unit root tests in terms of their power and size regarding different panel data structures, with a special focus on small data samples. In particular, different values of the cross-sectional and time dimensions for both heterogeneous and homogeneous data settings with intercept and with and without time trend are observed. We examine and compare the results of five commonly used first-generation panel unit root tests: Levin, Lin and Chu test, Im Pesaran and Shin test, Harris–Tzavalis test, Breitung test and a Fischer type test. The results are derived using Monte Carlo simulations and show that all the observed panel unit root tests suffer from a serious lack of power and tend to either over or under reject the null hypothesis when the time dimensions are small. It is evident that the results of conducting panel unit root tests for data with T<30 are erroneous and unreliable, and it is therefore concluded that panel unit root tests should not be conducted for such samples in the first place. This is even more pronounced when there is a time trend or heterogeneity.

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Section: Llcmentioning

confidence: 99%

“…In practice, however, many investigated data sets involve smaller N or T dimensions. Some examples are datasets related to EU, G-20, or G-8 countries, on yearly, quarterly or monthly frequencies for shorter time periods [8,7]. In addition, smaller dimensions may result from the subdivision of datasets into subsets or subperiods [25].…”

Section: Introductionmentioning

confidence: 99%

A Monte Carlo study on the size and power of panel unit root tests

Mravak

2023

Croat. oper. res. rev. (Online)

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“…Furthermore, Ganic et al (2021) test the crowding-in/-out hypothesis by examining the link between public borrowing and private investments. The authors consider two groups of countries in panel, on one side the transitional and on the other post-transitional European countries.…”

Section: Literature Reviewmentioning

confidence: 99%

Public, Private and Foreign Investment Nexus in the Republic of North Macedonia: Crowding-in or Out Effect?

Andonova

2022

EB&D

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The levelsof investments in North Macedonia have beenperceived for a long time assub-optimal, with significant capital budget bias, with regularly overestimated plans vs. outturn. The research problem elaborated is whether the structure of investments matters. Thus the objectiveof the article is to examine if there is a complementarity or substitutability between public and private investment, as well as the role of foreign direct investments in this nexus. Within the paperthe hypothesis of existence of crowding-in or crowding-out effectof the public investmentand foreign direct investment exert over private investment in North Macedoniais tested. The crowding-in and –out effect is tested with an autoregressive distributed lag bound testing. The results indicate crowding-out effect of public over private investments,with significanceof the foreign direct investments variable and at the same time crowding-in effect of foreign direct investments over private domestic investments. The crowding-out effect is immediate and short run.The results imply of a need for closer examination of the fiscal policies for public investment with efforts for improved public investment performance processes.

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The Relationship Between Public and Private Capital in Emerging Europe

Monastiriotis

Ranđelović

2023

Eastern European Economics

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The aim of this paper to evaluate the relationship between public and private capital formation in 16 economies from Central Eastern and South Eastern Europe, by applying panelcointegration method to 2000-2017 data. We find positive public-private capital formation nexus both in the short and the long-run, with pro-cyclicality of private capital formation and negative relevance of the user costs of capital. The results imply that expansionary public investment policy may be effective in boosting private investment both in the short and the long-run, if fitted into the financially sustainable framework that limits negative impact of the user cost of capital.

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A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe

Cited by 3 publications

References 27 publications

A Monte Carlo study on the size and power of panel unit root tests

A Monte Carlo study on the size and power of panel unit root tests

Public, Private and Foreign Investment Nexus in the Republic of North Macedonia: Crowding-in or Out Effect?

The Relationship Between Public and Private Capital in Emerging Europe

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