Abstract

This study examines potential disparities in how specific adverse macroeconomic conditions impact variability in US private and public investment growth. Using quarterly time series data spanning the period 1960–2012 and array of econometric procedures such as ARDL-Bound Test technique etc.; effects of specific macroeconomic conditions such as recession and inflation expectations on private and public investment growth are estimated. Our results show that in the short run, only macroeconomic uncertainty and fiscal policy volatility among variables tested, drives significant fluctuations in private investment growth. This study also finds that recession expectations rather augments public investment growth in both the short and the long run; but constrains private investment growth in the long run. Additionally, comparative analysis further show that private investment growth tend to be more susceptible to adverse macroeconomic conditions tested in this study than public investment growth.

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