Public and Private Investments in Greece: Complementary or Substitute 'Goods'?

In: Bulletin of economic research, Volume 52, Issue 3, p. 225-234

Abstract

This paper investigates whether government investment spending exerts a positive or a negative effect on private investments. Time‐series data for Greece as well as the methodology of cointegration suggest that, over the period 1948‐80, public investment spending exerted a positive effect on private investments, while over the period 1981‐96, the relationship turned out to be negative. Empirical results indicate that the large increase of the public share in the total investment process tended to crowd out private investments and to jeopardize the growth process of the economy.