What Influences Private Investment? The Case of the Czech Republic

Martin Gurtler

Abstract: What influences private investment in the Czech Republic? This paper arrives at a conclusion based on a survey of fixed-asset purchases in 30,000 non-financial corporations over the period 2008-2015. BVAR models are estimated on aggregates for 19 industries and the whole non-financial economy. As our results show, foreign demand is the most important factor for Czech business investment, especially in manufacturing and tourism. We also find an increased importance of expectations and uncertainty during the period under review. According to our findings, business investment is fostered by a devalued currency and is crowded out by public investment. The most profound crowding-out was seen in manufacturing and agriculture, whereas services, trade, and construction exhibit crowding-in. Finally, EU funds are found to be successful in providing occasional support to private investment.

Keywords: Bayesian VAR; crowding-out; Czech Republic; EU funds; exchange rate; interest rate; investment; monetary and fiscal policy; survey data; uncertainty (search for similar items in EconPapers)
JEL-codes: C55 D22 E22 H32 M21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-tra
Date: 2018-12
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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2018/14

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