Impact of Public Investment on Economic Growth
Abstract
The study examines the relationship between Gross domestic product and public investment. Timeseries data for empirical investigation covers the period 1980-2009. The data has collected from
Pakistan bureau of Statistics, State bank of Pakistan (SBP) and Stockholm International Peace
Research Institute (SIPRI). Empirical results show, there is a positive relationship between GDP and
public investment in short run. The increase in GDP causes a rapid increase in public investment.
Granger causality test apply to check the causality. Results of test show that bi-causal relationship
exists between GDP and public investment. Causality runs from GDP to public investment and
similarly, from public investment to GDP.
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