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Private and public investment in Malaysia: A panel time-series analysis


Hassan, Sallahuddin and Othman, Zalila and Abd Karim, Mohd Zaini (2011) Private and public investment in Malaysia: A panel time-series analysis. International Journal of Economics and Financial Issues, 1 (4). pp. 199-210. ISSN 2146-4138

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Abstract

Public capital hypothesis explains that a positive relationship exists between private and public investment. This paper examines the validity of the hypothesis by using a panel time series analysis on four sectors of the Malaysian economy (agriculture, industry and trade, transportation and communication, and construction). Panel co-integration analysis is used to prove the relationship between private domestic investment and public investment by using panel data for the period of 1976–2006.Two interaction variables, public investment and gross domestic product and investment and privatization policy were included as independent variables to take into account the influence of gross domestic product and privatization policy on the effect of public investment on private investment.Results of the study indicate that public investment has positive effect on private investment in all the three sectors except agricultural sector, suggesting that government expenditure encourage more private investment if focus is given towards productive expenditure.

Item Type: Article
Uncontrolled Keywords: Public capital hypothesis, Panel time-series, Malaysia
Subjects: H Social Sciences > HG Finance
Divisions: School of Economics, Finance & Banking
Depositing User: Dr. Sallahuddin Hassan
Date Deposited: 04 Aug 2015 01:46
Last Modified: 24 Apr 2016 02:54
URI: http://repo.uum.edu.my/id/eprint/15032

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