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Analysis of the Relationship Between Private Investment and Public Investment in Mexico

Received: 16 July 2018     Accepted: 8 August 2018     Published: 15 September 2018
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Abstract

The aim of this study is to identify the relationships between domestic private investment and domestic public investment in Mexico. The hypotheses are as follows: H1 – Domestic public investment generates domestic private investment (period between 1993 and 2017); H2 – Domestic public investment generates domestic private investment (period between 1993 and 2008); H3 – Domestic public investment generates domestic private investment (period between 2009 and 2017). In order to analyze the relationship between the variables in this study we used the quarterly data series on public gross fixed capital formation (public GFCF) and private gross fixed capital formation (private GFCF) provided by the Mexican System of National Accounts, corresponding to the period between the first quarter of 1993 and the second quarter of 2017. In order to fulfill the aims of this study, the following stages were performed: identification of the time series models, using the methodology consisting of autoregressive integrated moving average models or ARIMA models; validation of the models identified; determination of the cross correlation function; and regression analysis of the transformed series. The main results of the study for the series from 1993 to 2017 show a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 1: Domestic public investment generates domestic private investment (period between 1993 and 2017). The value of the Durbin-Watson statistic for this model is 2.103, meaning that the residuals are independent. The value of the constant in the model is not statistically significant. For the series from 1993 to 2008 there is a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 2: Domestic public investment generates domestic private investment, and the residuals are independent. With regard to the results for the series from 2009 to 2017, there is a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 3: Domestic public investment generates domestic private investment (period between 2009 and 2017). The value of the Durbin-Watson statistic for this model is 1.74, meaning that the residuals are independent. The value of the constant in the model is statistically significant.

Published in International Journal of Economics, Finance and Management Sciences (Volume 6, Issue 4)
DOI 10.11648/j.ijefm.20180604.15
Page(s) 174-184
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

Private Investment, Public Investment, Time-Series Models, Fiscal Policy and Crowding in

References
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[10] Hanke y Wichern (2010). Pronósticos en los Negocios, 9a ed., México: Pearson.
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[12] Chumacero R. (2000). Se busca una raíz unitaria: evidencia para Chile. Revista Estudios de Economía, 27 (1). Chile: Universidad de Chile, Departamento de Economía.
[13] Presno N. y López A. (2001). Tratamiento Estadístico de Series con cambios estructurales: Un caso de estudio, Revista Asturiana de Economía, 22, Oviedo: Universidad de Oviedo.
[14] Mahadeva L. y Robinson P. (2009). Prueba de Raíz Unitaria para ayudar a la construcción de un Modelo, Ensayos, 76. México: Centro de Estudios Monetarios Latinoamericanos (CEMLA).
[15] Castaño E. y Martínez M. (2008). Uso de la función de correlación cruzada en la identificación de modelos ARIMA, Revista Colombiana de Estadística, 31 (22), Colombia.
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[24] Jiménez, F. (2005). Regla de oro, sostenibilidad y regla fiscal contracíclica. XVII Seminario Regional de Política Fiscal CEPAL /ECLAC, Naciones Unidas. Santiago de chile, 24-27 enero de 2005.
[25] Fonseca, F. (2009). El impacto de la inversión pública sobre la inversión privada en México 1980-2007. Estudios Económicos, 24 (2); El Colegio de México, pp. 187-224.
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Cite This Article
  • APA Style

    Ana Laura Bojorquez Carrillo, Victor Manuel Villasuso Pino, Lilia Carolina Aviles Heredia. (2018). Analysis of the Relationship Between Private Investment and Public Investment in Mexico. International Journal of Economics, Finance and Management Sciences, 6(4), 174-184. https://doi.org/10.11648/j.ijefm.20180604.15

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    ACS Style

    Ana Laura Bojorquez Carrillo; Victor Manuel Villasuso Pino; Lilia Carolina Aviles Heredia. Analysis of the Relationship Between Private Investment and Public Investment in Mexico. Int. J. Econ. Finance Manag. Sci. 2018, 6(4), 174-184. doi: 10.11648/j.ijefm.20180604.15

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    AMA Style

    Ana Laura Bojorquez Carrillo, Victor Manuel Villasuso Pino, Lilia Carolina Aviles Heredia. Analysis of the Relationship Between Private Investment and Public Investment in Mexico. Int J Econ Finance Manag Sci. 2018;6(4):174-184. doi: 10.11648/j.ijefm.20180604.15

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  • @article{10.11648/j.ijefm.20180604.15,
      author = {Ana Laura Bojorquez Carrillo and Victor Manuel Villasuso Pino and Lilia Carolina Aviles Heredia},
      title = {Analysis of the Relationship Between Private Investment and Public Investment in Mexico},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {6},
      number = {4},
      pages = {174-184},
      doi = {10.11648/j.ijefm.20180604.15},
      url = {https://doi.org/10.11648/j.ijefm.20180604.15},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20180604.15},
      abstract = {The aim of this study is to identify the relationships between domestic private investment and domestic public investment in Mexico. The hypotheses are as follows: H1 – Domestic public investment generates domestic private investment (period between 1993 and 2017); H2 – Domestic public investment generates domestic private investment (period between 1993 and 2008); H3 – Domestic public investment generates domestic private investment (period between 2009 and 2017). In order to analyze the relationship between the variables in this study we used the quarterly data series on public gross fixed capital formation (public GFCF) and private gross fixed capital formation (private GFCF) provided by the Mexican System of National Accounts, corresponding to the period between the first quarter of 1993 and the second quarter of 2017. In order to fulfill the aims of this study, the following stages were performed: identification of the time series models, using the methodology consisting of autoregressive integrated moving average models or ARIMA models; validation of the models identified; determination of the cross correlation function; and regression analysis of the transformed series. The main results of the study for the series from 1993 to 2017 show a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 1: Domestic public investment generates domestic private investment (period between 1993 and 2017). The value of the Durbin-Watson statistic for this model is 2.103, meaning that the residuals are independent. The value of the constant in the model is not statistically significant. For the series from 1993 to 2008 there is a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 2: Domestic public investment generates domestic private investment, and the residuals are independent. With regard to the results for the series from 2009 to 2017, there is a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 3: Domestic public investment generates domestic private investment (period between 2009 and 2017). The value of the Durbin-Watson statistic for this model is 1.74, meaning that the residuals are independent. The value of the constant in the model is statistically significant.},
     year = {2018}
    }
    

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  • TY  - JOUR
    T1  - Analysis of the Relationship Between Private Investment and Public Investment in Mexico
    AU  - Ana Laura Bojorquez Carrillo
    AU  - Victor Manuel Villasuso Pino
    AU  - Lilia Carolina Aviles Heredia
    Y1  - 2018/09/15
    PY  - 2018
    N1  - https://doi.org/10.11648/j.ijefm.20180604.15
    DO  - 10.11648/j.ijefm.20180604.15
    T2  - International Journal of Economics, Finance and Management Sciences
    JF  - International Journal of Economics, Finance and Management Sciences
    JO  - International Journal of Economics, Finance and Management Sciences
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    EP  - 184
    PB  - Science Publishing Group
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    UR  - https://doi.org/10.11648/j.ijefm.20180604.15
    AB  - The aim of this study is to identify the relationships between domestic private investment and domestic public investment in Mexico. The hypotheses are as follows: H1 – Domestic public investment generates domestic private investment (period between 1993 and 2017); H2 – Domestic public investment generates domestic private investment (period between 1993 and 2008); H3 – Domestic public investment generates domestic private investment (period between 2009 and 2017). In order to analyze the relationship between the variables in this study we used the quarterly data series on public gross fixed capital formation (public GFCF) and private gross fixed capital formation (private GFCF) provided by the Mexican System of National Accounts, corresponding to the period between the first quarter of 1993 and the second quarter of 2017. In order to fulfill the aims of this study, the following stages were performed: identification of the time series models, using the methodology consisting of autoregressive integrated moving average models or ARIMA models; validation of the models identified; determination of the cross correlation function; and regression analysis of the transformed series. The main results of the study for the series from 1993 to 2017 show a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 1: Domestic public investment generates domestic private investment (period between 1993 and 2017). The value of the Durbin-Watson statistic for this model is 2.103, meaning that the residuals are independent. The value of the constant in the model is not statistically significant. For the series from 1993 to 2008 there is a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 2: Domestic public investment generates domestic private investment, and the residuals are independent. With regard to the results for the series from 2009 to 2017, there is a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 3: Domestic public investment generates domestic private investment (period between 2009 and 2017). The value of the Durbin-Watson statistic for this model is 1.74, meaning that the residuals are independent. The value of the constant in the model is statistically significant.
    VL  - 6
    IS  - 4
    ER  - 

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Author Information
  • Faculty of Accounting and Administration, Autonomous University of Yucatan, Merida, Mexico

  • Faculty of Accounting and Administration, Autonomous University of Yucatan, Merida, Mexico

  • Faculty of Accounting and Administration, Autonomous University of Yucatan, Merida, Mexico

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