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An investment equation for Fiji

Singh, Rup (2006) An investment equation for Fiji. School of Economics, the University of the South Pacific, Suva, Fiji.

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Abstract

In this paper a variant of the accelerator model of investment, augmented with the real rate of interest, is estimated for Fiji. Our estimates with two alternative techniques viz., the LSE-Hendry GETS and the Johansen Maximum Likelihood methods (JML) indicate that the long-run output elasticity is unity and the interest rate elasticity is high at -0.40. Therefore, the recent interest rate hikes by the Reserve Bank of Fiji (RBF) are likely to depress the already depressed investment climate in Fiji. Furthermore, our estimates show that the expected rate of inflation and political uncertainties have significant negative impact on private investment.

Item Type: Other
Additional Information: Working Paper 2006/1.
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Business and Economics (FBE) > School of Economics
Depositing User: Ms Neha Harakh
Date Deposited: 21 Mar 2006 10:47
Last Modified: 30 Jun 2012 17:51
URI: http://repository.usp.ac.fj/id/eprint/3887
UNSPECIFIED

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