Munich Personal RePEc Archive

Is the relationship between infrastructure and economic growth symmetric or asymmetric? evidence from Indonesia based on linear and non-linear ARDL

Maruf, Aminudin and Masih, Mansur (2019): Is the relationship between infrastructure and economic growth symmetric or asymmetric? evidence from Indonesia based on linear and non-linear ARDL.

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Abstract

Although there are a number of studies on the relationship between infrastructure and economic growth, this study is the first attempt at investigating whether the relationship between infrastructure and economic growth is symmetric or asymmetric in Indonesia. Using the non-linear ARDL technique, this study employs quarterly data from 1990:Q1 – 2016:Q1. The paper finds a long-run asymmetric relationship between infrastructure and economic growth but symmetric relationship in the short-run. Moreover, this study also finds the causal direction of economic development in Indonesia from gross fixed capital formation to labor. The paper suggests the expansion of investment in the infrastructural industry to boost the growth of the Indonesian economy. The study also urges the policy makers to design robust infrastructure policies guiding the infrastructure and country’s economy in both the short-run and long-run period.

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