Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/53019 
Year of Publication: 
2005
Series/Report no.: 
WIDER Discussion Paper No. 2005/11
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
We investigate domestic private investment behaviour in a panel of 24 low-income and middle-income countries spanning a period of 1981-2000. The paper rigorously addresses (i) the cross-country heterogeneity in private investment behaviour, and (ii) endogeneity. Indicators of financial sector development and other standard macroeconomic determinants of private investment appear significant in explaining private investment behaviour in our sample; however, the estimated parameters and adjustment dynamics exhibit important cross-country differences. The empirical findings of the paper have important implications namely that first, cross-country heterogeneity needs to be addressed while modelling the private investment behaviour, and second, at the policy level, the country-specific approach appears potentially more effective than the one-size-fits-all approach for boosting private investment.
Subjects: 
domestic private investment
public investment
dynamic heterogeneity
endogeneity
Generalised Method of Moments
JEL: 
E22
H54
O16
O23
ISBN: 
9291907510
Document Type: 
Working Paper

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