Abstract
This article empirically models investment in emerging economies. Using dynamic panel estimation methods and quarterly data for 31 emerging economies for the period 1990:1–2008:3, we show that (i) the GDP and the cost of capital are the key fundamental determinants of investment; (ii) financial factors (such as equity prices, credit and lending rate) play a relevant role on the dynamics of investment, in particular, for Asian and Latin American countries; (iii) investment growth exhibits substantial persistence and (iv) crises episodes magnify the negative response of investment.
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Ricardo Sousa would like to thank the International Policy Analysis Division of the ECB for its hospitality.
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Peltonen, T.A., Sousa, R.M. & Vansteenkiste, I.S. Investment in emerging market economies. Empir Econ 43, 97–119 (2012). https://doi.org/10.1007/s00181-011-0457-0
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DOI: https://doi.org/10.1007/s00181-011-0457-0