Did Fiji’s Budget Deficit Support Private Investment? Some Empirical Evidence:1982-2011

Abstract

Ever since the two coups in 1987, Fiji’s domestic investment climate has continued to remain uncertain. Aside from the lingering effects of these two coups, their re-occurrences of coups in 2000 and 2006 resulted in further setbacks. Against this background, government has been pushing hard to promote public expenditure not only to make up for the deficiency caused by private investment but also for promoting growth enhancing public infrastructure investment in the face of stagnant revenues. This paper looks at the relationship between the resultant budget deficits and private investment in a multivariate framework. The study findings are that budget deficits as such did not support private investment. The paper indicates the need for further research in regard to components of public expenditure

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