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Jagadish Prasad Sahu and Sitakanta Panda
''Is private investment being crowded out in India? Some fresh evidence''
( 2012, Vol. 32 No.2 )
We reexamine the crowding out hypothesis for India for the period 1970-71 to 2009-10. Applying a flexible accelerator model in a VECM framework, we find that government investment crowds out private investment in the long run while GDP has a significantly positive impact on the later. We also find that in the long run causality runs from public investment and GDP to private investment.
Keywords: private investment, crowding out, India.
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data)
Manuscript Received : Feb 16 2012 Manuscript Accepted : Apr 04 2012

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