Private and Public Investment in Malaysia: A Panel Time-series Analysis

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 communi...

Full description

Bibliographic Details
Main Authors: Sallahuddin Hassan, Zalila Othman, Mohd Zaini Abd Karim
Format: Article
Language:English
Published: EconJournals 2011-01-01
Series:International Journal of Economics and Financial Issues
Subjects:
Online Access:http://www.econjournals.com/index.php/ijefi/article/view/51/pdf
_version_ 1797918715179696128
author Sallahuddin Hassan
Zalila Othman
Mohd Zaini Abd Karim
author_facet Sallahuddin Hassan
Zalila Othman
Mohd Zaini Abd Karim
author_sort Sallahuddin Hassan
collection DOAJ
description 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.
first_indexed 2024-04-10T13:34:53Z
format Article
id doaj.art-ccf21a5bb55e454fa7ef9a33daa069bc
institution Directory Open Access Journal
issn 2146-4138
language English
last_indexed 2024-04-10T13:34:53Z
publishDate 2011-01-01
publisher EconJournals
record_format Article
series International Journal of Economics and Financial Issues
spelling doaj.art-ccf21a5bb55e454fa7ef9a33daa069bc2023-02-15T16:11:27ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382011-01-0114199210Private and Public Investment in Malaysia: A Panel Time-series AnalysisSallahuddin HassanZalila OthmanMohd Zaini Abd KarimPublic 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.http://www.econjournals.com/index.php/ijefi/article/view/51/pdfPublic capital hypothesisPanel time-seriesMalaysia
spellingShingle Sallahuddin Hassan
Zalila Othman
Mohd Zaini Abd Karim
Private and Public Investment in Malaysia: A Panel Time-series Analysis
International Journal of Economics and Financial Issues
Public capital hypothesis
Panel time-series
Malaysia
title Private and Public Investment in Malaysia: A Panel Time-series Analysis
title_full Private and Public Investment in Malaysia: A Panel Time-series Analysis
title_fullStr Private and Public Investment in Malaysia: A Panel Time-series Analysis
title_full_unstemmed Private and Public Investment in Malaysia: A Panel Time-series Analysis
title_short Private and Public Investment in Malaysia: A Panel Time-series Analysis
title_sort private and public investment in malaysia a panel time series analysis
topic Public capital hypothesis
Panel time-series
Malaysia
url http://www.econjournals.com/index.php/ijefi/article/view/51/pdf
work_keys_str_mv AT sallahuddinhassan privateandpublicinvestmentinmalaysiaapaneltimeseriesanalysis
AT zalilaothman privateandpublicinvestmentinmalaysiaapaneltimeseriesanalysis
AT mohdzainiabdkarim privateandpublicinvestmentinmalaysiaapaneltimeseriesanalysis