The determinants of public investment in Ethiopia: An ARDL approach

Public investment has shown increasing trends both in nominal and as a share of GDP over years Ethiopia. These upsurges public are believed to be due factors that have visible impact on the fiscal posture country. To investigate validity Wagner’s law Ethiopia; this study sets determinants Ethiopia general objective. Specifically, sought examine main influencing level along three explanatory variables. In order meet aforementioned objective, employed an autoregressive distributed lag (ARDL) approach period 1985–2019. Results from bound tests show there is long-run relationship between The real per capita found positively significantly which shows evidence favour law,i.e. spending high income elasticity demand. This also positive private two moving tandem. Again, foreign aid implying additional leads larger government capital. Moreover, degree urbanization suggests levels higher urban sector than rural economies. findings give strong policy implication makers because increase investments may then help spur economic growth.