Causality between Domestic Investment and Economic Growth: New Evidence from Argentina

Bakari, Sayef (2024): Causality between Domestic Investment and Economic Growth: New Evidence from Argentina.

Abstract

This study investigates the causal relationship between domestic investment and economic growth in Argentina over the period 1980-2022, utilizing cointegration analysis and a Vector Error Correction Model (VECM). The empirical results indicate that domestic investment has no significant long-term effect on economic growth. However, economic growth has a positive long-term impact on domestic investment, suggesting that growth stimulates investment rather than the reverse. In the short term, a bidirectional relationship exists between domestic investment and economic growth. These findings provide important policy implications for fostering sustainable economic development in Argentina.

• Item Type: MPRA Paper
• Language: English
• Keywords: Domestic Investment, Economic Growth, Argentina, VECM.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O54 - Latin America ; Caribbean

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