Determinants of Domestic Private Investment

Test of Alternative Hypotheses for Pakistan

Authors

  • Abdul Waheed

DOI:

https://doi.org/10.20525/ijrbs.v4i2.24

Keywords:

Crowding In, Debt Overhang, Political Regime, Law, Order, Investors' Confidence

Abstract

This paper analyzes the determinants of domestic private investment in Pakistan using long time series data for the period 1982 to 2012. The conventional variable such as output is not significant in explaining the domestic private investment but the interest rate has significant negative effect on private investment in the long run. The results of the study confirm the validity of crowding in hypothesis and debt overhang hypothesis for Pakistan. This study did not find any support for Mackinnon-Shaw hypothesis. The improvement in law and order condition and existence of democratic political regime in the country has significant positive effect on domestic private investment in the long run. The focus on non-conventional variables could restore investors’ confidence and may result in the recovery of domestic private investment in the country.

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Published

2015-04-22

How to Cite

Waheed, A. (2015). Determinants of Domestic Private Investment: Test of Alternative Hypotheses for Pakistan. International Journal of Research in Business and Social Science (2147- 4478), 4(2), 35–43. https://doi.org/10.20525/ijrbs.v4i2.24

Issue

Vol. 4 No. 2 (2015): April

Section

Articles

License

Copyright (c) 2015 Abdul Waheed

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