DOI:

Abstract

Public investment is the primary channel for economic infrastructures. During the economic transition, Vietnam's government has promulgated fiscal expansion policies by increasing public investment in the hope that public investment might positively influence the economic productivity as a whole and crowd in private investment. Vietnam, in recent years, has tried its best to control and cut back on public investment in an attempt to curb inflation. Thus what is the effect of cutbacks in public investment on private investment? This paper investigates the relationship between public investment and private investment to determine whether public investment crowds in or crowds out private investment. In the research, the Structural Vector Autoregressive (SVAR) model will be employed to analyze effects of structured variables in the model. The research finds that public investment helps crowd in private investment in a long run. Finally, some solutions will be recommended for improving public investment policies of Vietnam in future

Keywords

Public Investment; Private Investment; Crowding-In; Crowding-Out Effect; FDI; Gross Investment.