Symmetric and asymmetric impact of public investment on private investment in South Africa: Evidence from the ARDL and non-linear ARDL approaches

Abstract

This study examines the impact of public investment on private investment in South Africa using the autoregressive distributed-lag (ARDL) and nonlinear ARDL bounds testing approach for the period from 1980 to 2018. The ARDL results show that public investment crowds in private investment in the long and short run. The NARDL results indicate that the negative shock in public investment leads to a decrease in private investment in the long and short run. The results show that public investment has an asymmetric impact on private investment in South Africa. The study recommends that government increase investment in infrastructure such as energy, roads and railways, among others, in order to promote private investment.

Keywords:

• Private investment
• public investment
• asymmetry
• crowding in/out
• ARDL
• NARDL
• South Africa

JEL classification:

• E22
• H54

Disclosure statement

No potential conflict of interest was reported by the authors.

Data availability statement

The data that support the findings of this study are available upon reasonable request.

Notes

1. see also Muthu (2017), Muyambiri and Odhiambo (2018).