Effects of Government Expenditure on Private Investment - China Empirical Evidence

Ding-yu, WU; Zhang, Zhijue

doi:10.1109/etcs.2009.543

Cited by 4 publications

(4 citation statements)

References 7 publications

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“…Further, the long-run negative bearing due to deficit is more significant with public investment in mining and manufacturing (coefficient -1.14) and insignificant with construction and transport, storage and communication (infrastructure sector). Such negative deficit-investment nexus was observed for most of the emerging economies (Biza et al, 2015;Chakraborty, 2016;Wu & Zhang, 2009). Credit flow supports investment, but inflation and macroeconomic vulnerability drag it in the long and short-run.…”

Section: Shortmentioning

confidence: 96%

“…Moreover, Wang (2005) argues that public expenditure on health and education in Canada compliments, while expenditure on infrastructure and social security schemes substitutes private investment due to active participation of private corporates in physical infrastructure sector than in human capital formation. The asymmetric substitutive and complimentary relationship have also been observed for the Brazilian and Chinese economy in short and long-run, respectively (Cruz & Teixeira, 1999;Wu & Zhang, 2009). However, for South Africa, government investment neither crowds-in nor crowds-out private investment, though government spending in social and infrastructure sectors may indirectly influence private investment through accelerator effect (Kollamparambil & Nicolaou, 2011).…”

Section: Introductionmentioning

confidence: 92%

“…Many studies considering panel data suggest that deficit crowds out private investment marginally in developed countries (Mahmoudzadeh et al, 2017) and significantly in oil-dependent economies primarily through credit channel than interest rate channel (Anyanwu et al, 2018). In a similar line, fiscal deficit significantly crowds-out private investment for South Africa (Biza et al, 2015), India (Chakraborty, 2016;Dash, 2016), China (Wu & Zhang, 2009), and Pakistan (Hussain et al, 2009). Also, trade openness and output cyclicality have positive on investment for developing economies (Furceri & Sousa, 2011).…”

Section: Introductionmentioning

confidence: 98%

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Government fiscal spending and crowd-out of private investment: An empirical evidence for India

Shankar

2021

EJEM

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Purpose ─ The paper evaluates the crowding-in or crowding-out relationship between public and private investment in India, controlling fiscal and monetary variables.Methods ─ In a flexible accelerator theoretical framework, the paper estimates long and short-run investment dynamics, employing Autoregressive Distributed Lag (ARDL) cointegration approach. We use a back series of national account statistics that incorporates enhanced coverage of the organized corporate sector.Findings ─ Our results suggest investment complementarity between the public and private sector at an aggregate and sectoral level over the period 1981-2019. Barring short-run crowding-out in construction and financial services at industry level, public investment stimulates private counterparts, both in the long and short-run. However, fiscal deficit, inflation expectation, and sovereign vulnerability influence private investment adversely. Moreover, the long-run crowding-out bearing of fiscal imbalance is quantitatively higher when the public sector invests in mining and manufacturing and insignificant with infrastructure.Implication ─ Sizable infrastructure investment as a proportion of government finances would moderate the adverse impact of the deficit on private investment. Further, quality fiscal adjustments and containing inflation would enhance private investment activities.Originality ─ Besides aggregate and sectoral levels, the study also evaluates the impact of industry-level public investment on private capital expenditure. This paper also incorporates derived variables in the regression framework using statistical filters and the principal component technique.

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Section: Shortmentioning

confidence: 96%

Section: Introductionmentioning

confidence: 92%

Section: Introductionmentioning

confidence: 98%

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Government fiscal spending and crowd-out of private investment: An empirical evidence for India

Shankar

2021

EJEM

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“…Borge, Brueckner and Rattso, 2014). The increase in such productive investment and infrastructure investment will lead to a negative impact on private investment (Wu, 2009). Moreover, under pressure from political promotions and local finances, governments tend to invest limited financial resources in productive expenditure projects that are relatively more exclusive.…”

Section: The Indirect Effect Of Fiscal Vertical Imbalance On the Tran...mentioning

confidence: 99%

Vertical Fiscal Imbalance and Transformation of Industrial Innovation Achievements: Based on Panel Data of 30 Provinces in China

Yuan¹

2023

HBEM

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Based on the background of deepening the financial system reform and innovation-driven development strategy, this paper incorporates the vertical imbalance of finance and the transformation of industrial innovation achievements into the theoretical analysis framework, and explains the mechanism of the vertical imbalance of finance on the transformation of industrial innovation achievements through theoretical analysis. Based on the panel data of 30 provincial regions in China from 2003 to 2020, it is found that the current vertical fiscal imbalance in China has a significant negative impact on the transformation of industrial innovation achievements. Furthermore, there are regional and time heterogeneity, which is manifested in the fact that the transformation of industrial innovation achievements in the eastern region is not easily affected by the vertical fiscal imbalance, while the central and western regions are easily affected by the vertical fiscal imbalance. Meanwhile, the negative impact of fiscal vertical imbalance on the transformation of industrial innovation achievements after 2012 is significantly stronger than that before 2012. In addition, the scale of science and technology education expenditure has a mitigating effect on the negative effects of fiscal vertical imbalance and the transformation of industrial innovation achievements. In order to promote the implementation of innovation-driven development strategy, China should further deepen the reform of financial system, improve the performance appraisal system of local governments, and accelerate the optimization and upgrading of industrial structure.

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A comparison of forecasting models of debt guaranteed and government expenditure in Malaysia

Khairudin,

Amit,

Rafee

et al. 2023

5th International Conference on Electrical, Electronic, Communication and Control Engineering (Iceecc 2021)

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Effects of Government Expenditure on Private Investment - China Empirical Evidence

Cited by 4 publications

References 7 publications

Government fiscal spending and crowd-out of private investment: An empirical evidence for India

Government fiscal spending and crowd-out of private investment: An empirical evidence for India

Vertical Fiscal Imbalance and Transformation of Industrial Innovation Achievements: Based on Panel Data of 30 Provinces in China

A comparison of forecasting models of debt guaranteed and government expenditure in Malaysia

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