Browsing by Author "Temesgen, Merga"

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    Effect of Public Investment on Private Investment: In Case of Ethiopia
    (A.A.U, 2020-06) Temesgen, Merga; Mesele, A. (PhD)
    This study has examined the e ect of public investment on private invest- ment in Ethiopia during 1993 to 2018. It also examined their relative con- tribution to economic growth. The study employed the ARDL bounds testing approach which is initiated by Pesaran & and Shin (1999) and later popularized by (Pesaran, et al., 2001). The empirical results reveal that public investment has a crowding-in e ect on private investment in the long run which means, public investment stimulates private investment in the long run. In the short run, however, public investment has a crowding-out e ect on private investment. The previous year public investment also declines the current period private in- vestment in the short run. On the other case, public investment has no direct impact on economic growth in the long run. Economic growth is positively as- sociated with private investment although it is statistically insigni cant in the long run. However, it has no any immediate e ect on private investment in the short run. On the other direction, private investment has a signi cant positive impact on economic growth in the long run while it is negatively related to economic growth in the short run. This suggests that there is a unidirectional e ect, which means private investment could a ect economic growth while it is not vice versa. In addition, private investment positively contributes to eco- nomic growth more than public investment. Real interest rate has a signi cant negative e ect on private investment in the long run while it is positively asso- ciated with private investment in the short run. However, real interest rate has no direct signi cant impact on economic growth in the long run.