An autonomous research institute under the Ministry of Finance


Did public investment crowd out private investment in India?

Publication date

Jul, 2020


NIPFP Working Paper No. 312


Honey Karun, Hrishikesh Vinod, and Lekha S. Chakraborty


Our paper uses the ME (Maximum Entropy) bootstrap method to overcome the econometric constraints of using a short time series after the publication of a new macroeconomic series in India. We use a short time series (quarterly data) of stationary and nonstationary variables between 2011-2016 to confirm the positive role of public infrastructure investment. The significant result has policy implications in terms of the current debate, whether public investment ‘crowds-in’ rather than ‘crowds-out’ private corporate investment in India. 
JEL Classification: E62, C32, H62
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