The Impact of Domestic Debt on Private Investment in The Gambia: An ARDL Approach

Year 2020, Volume: 5 Issue: 1, 111 - 127, 30.04.2020

Bilge Kağan Ozdemir , Ebrima Gomez

https://doi.org/10.30784/epfad.682291

Abstract

This study aims to analyse the impact of domestic debt on private investment in the Gambia by developing an investment model based on the neoclassical investment function and considered an annual time series data set from 1980 to 2013. To examine the nexus between our dependent variable, private investment and the explanatory variables, we used an Autoregressive Distributed Lag (ARDL) model. Based on the bounds test result, a long run relationship exists between our variables. Furthermore, domestic debt was found to have a negative effect on private investment in the short run but not in the long run. On the other hand, the real interest rates had a crowding-out effect on private investment in the long run but a positive effect in the short run. This study will be a guide for policymakers on formulating fiscal and monetary policies to curb the level of domestic borrowing to optimal or sustainable levels. 

Keywords

Private Investment, Domestic Debt, Real Interest Rate, Bounds Test, Cointegration

Gambiya'da İç Borçların Özel Sektör Yatırımları Üzerindeki Etkileri: ARDL Yaklaşımı

Abstract

Bu çalışma, neoklasik yatırım fonksiyonuna dayalı bir yatırım modeli geliştirerek ve 1980-2013 yılları arasında yıllık zaman dizisi verilerini dikkate alarak iç borçların Gambiya'daki özel yatırımlar üzerindeki etkisini analiz etmeyi amaçlamaktadır. Bağımlı değişkenimiz olan özel sektör yatırımları ile bağımsız değişkenlerimiz arasındaki bağlantının incelenmesi amacıyla Gecikmesi Dağıtılmış Otoregresif Modeli (ARDL) kullanılmıştır. Sınır testi sonucuna göre değişkenlerimiz arasında uzun dönemli bir ilişki bulunmaktadır. Ayrıca, iç borcun kısa vadede özel yatırım üzerinde olumsuz bir etkisi olduğu, uzun vadede ise olumusuz bir etkiye sahip olmadığı bulunmuştur. Öte yandan, reel faiz oranlarının uzun vadede özel sektör yatırımları üzerinde dışlama etkisi olmasına karşı kısa vadede olumlu bir etkiye sahip olduğu görülmektedir. Bu çalışma, politika yapıcılar için iç borçlanma seviyesini en uygun veya sürdürülebilir seviyelere çekmek amacıyla geliştirilen maliye ve para politikaları oluşturulması konusunda bir rehber olacaktır. 

Keywords

Özel Yatırım, İç Borç, Reel Faiz Oranı, Sınır Testi, Eşbütünleşme

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