Testing of the crowding out effect for Turkey
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Jan 12, 2017
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Abstract
In this study, we test the effect of public investment on private sector investment for Turkey for the period 1980-2014. There can be three different types of relationship between them. Public investment can have crowding in effect on private sector investment. That is, an increase in public investments creates same way change in private sector investments. Public investment can have crowding out effect on private sector investment. In other words, an increase in public investments decreases private sector investments Public investment can have no effect on private sector investment. We first test the existence of the relationship between them by using recently introduced unit root and cointegration tests. We test the stationarity of the variables by using Kapetanios (2005) unit root test and test the long run relationship by employing Maki (2009) cointegration test. Both of the tests allow multiple structural breaks which determined endogenously. Since we find the long run relationship between public and private sector investments we examine the type of the effect using FMOLS cointegrating model which supports evidence for the crowding-in effect. Keywords: Crowding Out Effect, Cointegration, Structural Breaks
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How to Cite
YILANCI, Veli; AYDIN, Mücahit.
Testing of the crowding out effect for Turkey.
New Trends and Issues Proceedings on Humanities and Social Sciences, [S.l.], v. 2, n. 2, p. 216-220, jan. 2017.
ISSN 2421-8030.
Available at: <http://sproc.org/ojs/index.php/pntsbs/article/view/447>. Date accessed: 23 sep. 2017.
doi: https://doi.org/10.18844/gjhss.v2i2.447.
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References
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Lumsdaıne, R.L., & Papell, D.H. (1997). Multiple Trend Breaks And The Unit Root Hypothesis. The Review Of Economics And Statistics, 79(2), 212- 218.
Maki, D. (2009). Tests for a unit root using three-regime TAR models: Power comparison and some applications, Econometric Reviews, 28(4), 335-363.
Narayan, P.K., (2004). Do Public Investment Crowd Out Private Investment? Fresh Evidence from Fiji. Journal of Public Modeling, 26, 747-753.
Pereira, A. M. (2001). On the Effects of Public Investment on Private Investment: What Crowds in What?, Public Finance Review, 29(1), 3-25.
Perron, P. (1989). The Great Crash, The Oil Price Shock, And The Unit Root Hypothesis, Econometrica, 57(6), 1361-1401.
Zıvot, E., & Andrews, D. (1992). Further Evidence On The Great Crash, The Oilprice Shock, And The Unit Root Hypothesis. Journal Of Business & Economic Statistics, 10(3), 251-270.
Başar, S., & Temurlenk, M. S. (2007). Investigating Crowding-Out Effect of Government Spending for Turkey: A Structural VAR Approach. Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, 21(2), 95-104.
Çil Yavuz, N. (2001). Türkiye'de Kamu Yatırım Harcamalarının Özel Sektör Yatırım Harcamalarını Dışlama Etkisi Üzerine Ekonometrik Bir Analiz (1990-1 / 2000-Iv). Kamu-İş Dergisi, 6(2), 55-65.
Kapetanios, G. (2005). Unit-root testing against the alternative hypothesis of up to m structural breaks. Journal of Time Series Analysis, 26(1), 123-133,
Lee, J., & Strazıcıch, M.C. (2003). Minimum Lagrange Multiplier Unit Root Test With Two Structural Breaks. The Review Of Economics And Statistics, 85(4), 1082-1089.
Lee, J., & Strazıcıch, M.C. (2004). Minimum Lm Unit Root Test With One Structural Break. Appalachian State University Working Papers, 04-17, 1- 15.
Lumsdaıne, R.L., & Papell, D.H. (1997). Multiple Trend Breaks And The Unit Root Hypothesis. The Review Of Economics And Statistics, 79(2), 212- 218.
Maki, D. (2009). Tests for a unit root using three-regime TAR models: Power comparison and some applications, Econometric Reviews, 28(4), 335-363.
Narayan, P.K., (2004). Do Public Investment Crowd Out Private Investment? Fresh Evidence from Fiji. Journal of Public Modeling, 26, 747-753.
Pereira, A. M. (2001). On the Effects of Public Investment on Private Investment: What Crowds in What?, Public Finance Review, 29(1), 3-25.
Perron, P. (1989). The Great Crash, The Oil Price Shock, And The Unit Root Hypothesis, Econometrica, 57(6), 1361-1401.
Zıvot, E., & Andrews, D. (1992). Further Evidence On The Great Crash, The Oilprice Shock, And The Unit Root Hypothesis. Journal Of Business & Economic Statistics, 10(3), 251-270.