Impact of Public Debt, Deficit and Debt Financing on Private Investment in a Large Country: Evidence from the United States
Published: 23 November 2020
World Journal of Applied Economics , Volume 6, pp 139-161; doi:10.22440/wjae.6.2.3
Abstract: This paper analyses the direct impact of fiscal variables on private investment. The current literature ignores one or more fiscal variables and, in many cases, the foreign financing of debt. In this paper, an aggregate investment function for an economy in which firms incur adjustment costs in their investment process is developed. The developed model incorporates the direct impact of government expenditure, public debt and investment, deficits and foreign-financed debt on private investment. The model is tested on US data. It is found that public investment does not have any impact on private investment, but government expenditure, deficit, debt and foreign-financed debt crowd out private investment over the long run. However, deficit crowds in the private investment over the short run.
Keywords: Function / model / deficit / crowd / fiscal / private investment / Foreign Financed / financed debt
Scifeed alert for new publicationsNever miss any articles matching your research from any publisher
- Get alerts for new papers matching your research
- Find out the new papers from selected authors
- Updated daily for 49'000+ journals and 6000+ publishers
- Define your Scifeed now
Click here to see the statistics on "World Journal of Applied Economics" .