A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe
This study seeks to test the existence of the crowding-out (or- in) hypothesis in a sample of 17 Emerging Europe countries divided in two panels. The study employs a panel autoregressive distributed lag (ARDL) model based on three estimators, Mean Group Estimator (MG), Pooled Mean Group (PMG) and Dy...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Croatian Operational Research Society
2021-01-01
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| Series: | Croatian Operational Research Review |
| Subjects: | |
| Online Access: | https://hrcak.srce.hr/file/377393 |
| _version_ | 1797206911630704640 |
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| author | Mehmed Ganic Lejla Hodzic Ognjen Ridic |
| author_facet | Mehmed Ganic Lejla Hodzic Ognjen Ridic |
| author_sort | Mehmed Ganic |
| collection | DOAJ |
| description | This study seeks to test the existence of the crowding-out (or- in) hypothesis in a sample of 17 Emerging Europe countries divided in two panels. The study employs a panel autoregressive distributed lag (ARDL) model based on three estimators, Mean Group Estimator (MG), Pooled Mean Group (PMG) and Dynamic Fixed Effect (DFE), in order to evaluate the of stability of short run and long run coefficients using consistently compiled public borrowing and private investment data between 2000 and 2019. The empirical findings of the paper generally confirm the existence of a crowding out effect in both long run and short run in European post-transition countries, and in the long run for European transition countries. More specifically, elasticity of private investment with respect to public debt is greater in the European transition countries than in the European post-transition countries. However, the findings on the crowding out (in) effect of government spending and economic growth on private investment are mixed and conflicting in both the long run and the short run. Accordingly, the study recommends that selected countries should reassess their austerity agendas employed for lowering debt levels, and follow new strategies for managing public debt burden. |
| first_indexed | 2024-04-24T09:14:32Z |
| format | Article |
| id | doaj.art-21b0b641e30e4d70ab630647d1f70b26 |
| institution | Directory Open Access Journal |
| issn | 1848-0225 1848-9931 |
| language | English |
| last_indexed | 2024-04-24T09:14:32Z |
| publishDate | 2021-01-01 |
| publisher | Croatian Operational Research Society |
| record_format | Article |
| series | Croatian Operational Research Review |
| spelling | doaj.art-21b0b641e30e4d70ab630647d1f70b262024-04-15T17:01:03ZengCroatian Operational Research SocietyCroatian Operational Research Review1848-02251848-99312021-01-011219110310.17535/crorr.2021.0008A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging EuropeMehmed Ganic0Lejla Hodzic1Ognjen Ridic2Faculty of Business and Administration, International University of SarajevoFaculty of Business and Administration, International University of SarajevoFaculty of Business and Administration, International University of SarajevoThis study seeks to test the existence of the crowding-out (or- in) hypothesis in a sample of 17 Emerging Europe countries divided in two panels. The study employs a panel autoregressive distributed lag (ARDL) model based on three estimators, Mean Group Estimator (MG), Pooled Mean Group (PMG) and Dynamic Fixed Effect (DFE), in order to evaluate the of stability of short run and long run coefficients using consistently compiled public borrowing and private investment data between 2000 and 2019. The empirical findings of the paper generally confirm the existence of a crowding out effect in both long run and short run in European post-transition countries, and in the long run for European transition countries. More specifically, elasticity of private investment with respect to public debt is greater in the European transition countries than in the European post-transition countries. However, the findings on the crowding out (in) effect of government spending and economic growth on private investment are mixed and conflicting in both the long run and the short run. Accordingly, the study recommends that selected countries should reassess their austerity agendas employed for lowering debt levels, and follow new strategies for managing public debt burden.https://hrcak.srce.hr/file/377393Crowding (-in) out hypothesispublic debtprivate investmentEuropean transition and post-transition countries |
| spellingShingle | Mehmed Ganic Lejla Hodzic Ognjen Ridic A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe Croatian Operational Research Review Crowding (-in) out hypothesis public debt private investment European transition and post-transition countries |
| title | A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe |
| title_full | A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe |
| title_fullStr | A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe |
| title_full_unstemmed | A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe |
| title_short | A Test of the validity of Crowding-out (or- in) hypothesis: A new examination of link between public borrowing and private investment in Emerging Europe |
| title_sort | test of the validity of crowding out or in hypothesis a new examination of link between public borrowing and private investment in emerging europe |
| topic | Crowding (-in) out hypothesis public debt private investment European transition and post-transition countries |
| url | https://hrcak.srce.hr/file/377393 |
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