Modelling private manufacturing investment in Turkey

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2002

Author

Kale Attar, Pelin
Temel, Adil

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This paper presents an empirical model of private manufacturing investment in Turkey based on a neoclassical model of investment that allows for costly adjustment of capital. Before the resultant error correction model is estimated, the long run effects of public investment on private capital formation are investigated using multivariate cointegration techniques. Our empirical results show that in the long run, private manufacturing investment responds positively to an increase in the manufacturing sector’s real income and negatively to an increase in public investment or cost of capital. The short run dynamics of private investment captured through the ECM suggest that the current period’s public investment has a negative impact on private capital formation, while a positive effect is observed with a lag of one year.

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http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/6
https://hdl.handle.net/11511/58547

Journal

ODTÜ Gelişme Dergisi

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Department of Economics, Article

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Citation Formats

P. Kale Attar and A. Temel, “Modelling private manufacturing investment in Turkey,” ODTÜ Gelişme Dergisi, vol. 29, no. 1, pp. 109–122, 2002, Accessed: 00, 2020. [Online]. Available: http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/6.