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Anirudha Barik and Asit Ranjan Mohanty
''New evidence on the relationship between public and private investment in India''
( 2019, Vol. 39 No.3 )
The purpose of this paper is to examine the long run relationship between public investment and private investment in India. To this end, we employ the autoregressive distributed lag (ARDL) – bounds test approach, using data for the period 1980-81 to 2015-16. Finally, an error correction model is estimated to show the short-run dynamics along with the speed of adjustment to the equilibrium relationship among the variables. The estimated results suggest that public investment crowds in private investment in India. Furthermore, the speed of adjustment parameter indicates that adjustment process towards long run equilibrium is relatively high and CUSUM and CUSUMSQ tests confirmed that the models are stable over the sample period.
Keywords: ARDL, Public Investment, Private Investment, 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 06 2019 Manuscript Accepted : Sep 03 2019

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