# The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe

^{1}

^{2}

^{3}

^{*}

## Abstract

**:**

## 1. Introduction

## 2. Literature Review

**H1.**

**H2.**

- -
- identifying the statistical link between private investment and the business cycle;
- -
- analysis of the possibility for public investment to mitigate the impact of private investment fluctuations on the economy;
- -
- estimating the impact of the public capital multiplier.

## 3. Research Methodology

#### 3.1. Testing Methodological Framework

_{t}= a

_{11}+ a

_{12}X

_{t−1}+ a

_{13}Y

_{t}+ a

_{14}Y

_{t−1}+ ε

_{xt}

_{t}= a

_{21}+ a

_{22}Y

_{t−1}+ a

_{23}X

_{t}+ a

_{24}X

_{t−1}+ ε

_{zt},

_{t}, Y

_{t}—variables studied, ε

_{xt}and ε

_{zt}are uncorrelated white noises (errors are completely random).

_{t}= (I

_{t−1}+ (1 − φ)I

_{t−2}+ (1 − φ)

^{2}I

_{t−3}+ …) = I

_{t−1}[1 + (1 − φ)(1 + λ) + (1 − φ)

^{2}(1 + λ)

^{2}+ …) = I

_{t−1}(1 + λ)/(φ + λ) = It/(φ + λ)

_{t}= capital at time t, the initial moment from which investment data are given, It—investments, φ—depreciation rate (assumed to be constant), λ—investment growth rate, obtained by regressing investments according to a time trend.

#### 3.2. Description of the Database

- -
- Real gross domestic product (at market prices, chain linked volumes (2015), million Euro) [58]; a quarterly frequency was used as it is the most logical given the need to observe changes in GDP over time;
- -
- Gross fixed capital formation (chain linked volumes (2015), million Euro; quarterly frequency) [59];
- -
- Average number of regular weekly working hours in the main job, by sex, professional status, full-time/part-time, and occupation (employed persons, age from 15 to 64 years, hour) [60];
- -
- Real public capital and real private capital data are constructed by applying a perpetual inventory method.

## 4. Results

## 5. Discussion

## 6. Conclusions

## Author Contributions

## Funding

## Informed Consent Statement

## Data Availability Statement

## Conflicts of Interest

## References

- Musgrave, A.R.; Peacock, A.T. Classics in the Theory of Public Finance; Reprint edition; Lowe & Brydone (Printers) Ltd.: Londra, UK, 1967; Volume 212. [Google Scholar]
- Hickey, R.; Lozej, M.; Smyth, D. Financing government investment and its implications for public capital: A small open economy perspective. Econ. Model.
**2020**, 93, 620–641. [Google Scholar] [CrossRef] - Marshall, W.C.; Rochon, L.P. Public banking and pots-Keynesian economic theory. Int. J. Political Econ.
**2019**, 48, 60–75. [Google Scholar] [CrossRef] - Darvas, Z.; Martin, P.; Ragot, X. European Fiscal Rules Require a Major Overhaul. Policy Contribution. October 2018, p. 18. Available online: https://www.bruegel.org/sites/default/files/wp-content/uploads/2018/10/PC-18_2018.pdf (accessed on 1 June 2022).
- Eurostat, Investment Share of GDP by Institutional Sectors. Available online: https://ec.europa.eu/eurostat/databrowser/view/sdg_08_11/default/table (accessed on 6 November 2021).
- Aschauer, D.A. Do states optimize? In Public Capital and Economic Growth; Working Paper nr. 189; Levy Economics Institute of Bard College: Annandale-on-Hudson, NY, USA, 1997. [Google Scholar]
- Munnell, A.H. Why Has Productivity Growth Declined? Productivity and Public Investment. N. Engl. Econ. Rev.
**1990**, 3–22. [Google Scholar] - Argimon, I.; Gonzalez-Paramo, J.M.; Roldan Alegre, J.M. Does Public Investment Crowd-Out Private Investment? Evidence from a Panel of 14 Countries; Research Department, Banco de Espana and European Monetary Institute, Bank of Spain Printing House: Madrid, Spain, 1995. [Google Scholar]
- Solow, R.M. A Contribution to the Theory of Economic Growth. Q. J. Econ.
**1956**, 70, 65–94. [Google Scholar] [CrossRef] - Warner, A. Public Investment as an Engine of Growth; IMF Working Paper 14/148; International Monetary Fund: Washington, DC, USA, 2014. [Google Scholar]
- Mankiw, G.N.; Romer, D.; Weil, D. A Contribution to the Empirics of Economic Growth. Q. J. Econ.
**1992**, 107, 407–437. [Google Scholar] [CrossRef] - Holtz-Eakin, D.; Schwartz, A.E. Infrastructure in a Structural Model of Economic Growth. Reg. Sci. Urban Econ.
**1995**, 25, 131–151. [Google Scholar] [CrossRef] [Green Version] - Heijdra, B.J.; Meijdam, L. Public investment and intergenerational distribution. J. Econ. Dyn. Control
**2002**, 26, 707–735. [Google Scholar] [CrossRef] - Cavallo, E.; Daude, C. Public investment in developing countries: A blessing or a curse? J. Comp. Econ.
**2011**, 39, 65–81. [Google Scholar] [CrossRef] [Green Version] - Arslanalp, S.; Barnharst, F.; Gupta, S.; Sze, E. Public Capital and Growth; IMF Working Paper no. 175; International Monetary Fund: Washington, DC, USA, 2010. [Google Scholar]
- Gupta, S.; Kangur, A.; Papageorgiou, C.; Wane, A. Efficiency Adjusted Public Capital and Growth; IMF Working Paper, WP/11/217; International Monetary Fund: Washington, DC, USA, 2011. [Google Scholar]
- Romp, W.; Haan, J. Public Capital and Economic Growth: A Critical Survey. Perspekt. Der Wirtsch.
**2007**, 8, 6–52. [Google Scholar] [CrossRef] [Green Version] - Kamps, C. New Estimates of Government Net Capital Stocks for 22 OECD Countries, 1960–2001; IMF Working Paper; International Monetary Fund: Washington, DC, USA, 2004. [Google Scholar]
- Chen, H. The macroeconomic effect of public investment. Mod. Econ.
**2017**, 8, 1272–1290. [Google Scholar] - Deleidi, M.; Iafrate, F.; Levrero, E.S. Public investment fiscal multipliers: An empirical assessment for European countries. Struct. Chang. Econ. Dyn.
**2020**, 52, 354–365. [Google Scholar] [CrossRef] - Kamps, C. Is there a Lack of Public Capital in the European Union? EIB Papers; European Investment Bank (EIB): Luxembourg, 2005; Volume 10, pp. 73–93. [Google Scholar]
- Baldi, G.; Fichtner, F.; Michelsen, C.; Rieth, M. Weak Investment Dampens Europe’s Growth; DIW Berlin: Berlin, Germany, 2014; Volume 4. [Google Scholar]
- De Jong, J.; Ferdinandusse, M.; Funda, J.; Vetlov, I. The Effect of Public Investment in Europe: A Model-Based Assessment ECB Working Paper No. 2021. 2017. Available online: https://ssrn.com/abstract=2921108 (accessed on 7 December 2021). [CrossRef]
- Cullison, W.E. Public Investment and Economic Growth, Federal Reserve Bank of Richmond. Econ. Q.
**1993**, 79/4, 19–33. [Google Scholar] - Pritchett, L. Mind your P’s and Q’s.: The Cost of Public Investment Is Not the Value of Public Capital; World Bank Policy Research Paper No. 1660; World Bank: Washington, DC, USA, 1996. [Google Scholar]
- United Nations. The Role of Public Investment in Social and Economic Development; United Nations: New York, NY, USA; Geneva, Switzerland, 2009. [Google Scholar]
- Aschauer, D.A. Is public expenditure productive? J. Monet. Econ.
**1989**, 23, 177–200. [Google Scholar] [CrossRef] - Aschauer, D.A. Public capital and economic growth: Issues of Quantity, Finance, and Efficiency. Econ. Dev. Cult. Chang.
**2000**, 48, 391–406. [Google Scholar] [CrossRef] [Green Version] - Nazmi, N.; Ramirez, M.D. Public and private investment and economic growth in Mexico. J. Contemp. Econ. Policy
**1997**, 15, 65–75. [Google Scholar] [CrossRef] - Jong-A-Pin, R.; de Haan, J. Time-varying impact of public capital on output: New evidence based on VARs for OECD countries. EIB Pap.
**2008**, 13, 56–81. [Google Scholar] - Everhart, S.S.; Sumlinski, M.A. Trends in Private Investment in Developing Countries and the Impact on Private Investment of Corruption and the Quality of Public Investment, International Finance Corporate Discussion Paper 44, 2001; The World Bank: Washington, DC, USA, 2001. [Google Scholar]
- Nusrat, A.; Megha, G.; Kirtti, R.P. The Crowding-in/out Debate in Investments in India: Fresh Evidence from NARDL Application. South Asian J. Macroecon. Public Financ.
**2020**, 9, 167–189. [Google Scholar] - Muthu, S. Does public investment crowd-out private investment in India? J. Financ. Econ. Policy
**2017**, 9, 50–69. [Google Scholar] [CrossRef] - Ari, I.; Koc, M. Economic Growth, Public and Private Investment: A Comparative Study of China and the United States. Sustainability
**2020**, 12, 2243. [Google Scholar] [CrossRef] [Green Version] - Gjini, A.; Kukeli, A. Crowding-Out Effect of Public Investment on Private Investment: An Empirical Investigation. J. Bus. Econ. Res.
**2012**, 10, 269–276. [Google Scholar] [CrossRef] [Green Version] - Crowder, W.J.; Himarios, D. Balanced growth and public capital: An empirical analysis. Appl. Econ.
**1997**, 29, 1045–1053. [Google Scholar] [CrossRef] - Phetsavong, K.; Ichihashi, M. The Impact of Public and Private Investment on Economic Growth: Evidence from Developing Asian Countries; IDEC Discussion Paper; Hiroshima University: Higashihiroshima, Japan, 2012. [Google Scholar]
- Voss, G.M. Public and private investment in the United States and Canada. Econ. Model.
**2002**, 19, 641–664. [Google Scholar] [CrossRef] - Khan, M.S.; Kumar, M.S. Public and Private Investment and the Growth Process in Developing Countries. Oxf. Bull. Econ. Stat.
**1997**, 59, 69–88. [Google Scholar] [CrossRef] - Bom, P.R.D.; Ligthart, J.E. Public infrastructure investment, output dynamics, and balanced budget fiscal rules. J. Econ. Dyn. Control
**2014**, 40, 334–354. [Google Scholar] [CrossRef] [Green Version] - Afonso, A.; St. Aubyn, M. Economic growth, public, and private investment returns in 17 OECD economies. Port. Econ. J.
**2019**, 18, 47–65. [Google Scholar] [CrossRef] [Green Version] - Masten, I.; Grdovic Gnip, A. Macroeconomic effects of public investment in South-East Europe. J. Policy Model.
**2019**, 41, 1179–1194. [Google Scholar] [CrossRef] - Nunez-Serrano, J.A.; Velasquez, F.J. Is Public Capital Productive? Evidence from a Meta-analysis. Appl. Econ. Perspect. Policy
**2016**, 39, 313–345. [Google Scholar] [CrossRef] - Furceri, D.; Li, B.G. The Macroeconomic (and Distributional) Effects of Public Investment in Developing Economies; IMF Working Paper; International Monetary Fund: Washington, DC, USA, 2017. [Google Scholar]
- Ganelli, G.; Tervala, J. The Welfare Multiplier of Public Infrastructure Investment; IMF Working Paper no. 16/40; International Monetary Fund: Washington, DC, USA, 2016. [Google Scholar]
- Fournier, J.M. The Positive Effect of Public Investment on Potential Growth; OECD Working paper, no. 1347; Organisation de Coopération et de Développement Économiques: Paris, France, 2016. [Google Scholar]
- Dreger, C.; Reimers, H.E. Does public investment stimulate private investment? Evidence for the euro area. Econ. Model.
**2016**, 58, 154–158. [Google Scholar] [CrossRef] - Hodrick, R.T.; Prescott, E.C. Postwar U.S. Business Cycles: An Empirical Investigation, Blackwell Publishing. J. Money Credit. Bank.
**1997**, 29, 1–16. [Google Scholar] [CrossRef] - Ravn, M.O.; Uhlig, H. Notes on Adjusting the Hodrick-Prescott Filter for the Frequency of Observations. Rev. Econ. Stat.
**2002**, 84, 371–375. [Google Scholar] [CrossRef] [Green Version] - Estrella, A.; Trubin, M.R. The Yield Curve as a Leading Indicator: Some Practical Issues, Federal Reserve Bank of New York. Curr. Issues Econ. Financ.
**2006**, 12, 1–7. [Google Scholar] - Cooley, T.F.; Leroy, S.F. A Theoretical Macroeconometrics A Critique. J. Monet. Econ.
**1985**, 16, 283–308. [Google Scholar] [CrossRef] - Granger, C.W.J. Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica
**1969**, 37, 424–438. [Google Scholar] [CrossRef] - Foresti, P. Testing for Granger Causality between Stock Prices and Economic Growth, Munich Personal Repec Archive; University Library of Munich: Germania, Germany, 2006. [Google Scholar]
- Stock, J.H.; Watson, M.W. Vector Autoregressions. J. Econ. Perspect.
**2001**, 15, 101–115. [Google Scholar] [CrossRef] [Green Version] - OECD, Annex C: Simplified Perpetual Inventory Method, Measuring Capital-OECD Manual 2009, 2nd ed.; OECD Publishing: Paris, France, 2009.
- Available online: https://www.imf.org/external/pubs/ft/ar/2019/eng/assets/pdf/imf-annual-report-2019.pdf (accessed on 15 May 2022).
- Available online: https://datatopics.worldbank.org/world-development-indicators/the-world-by-income-and-region.html (accessed on 15 May 2022).
- Eurostat, Gross Domestic Product (GDP) at Market Prices, Chain Linked Volumes (2015), Million Euro. Available online: https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_10_gdp&lang=en (accessed on 6 November 2021).
- Eurostat, Gross Fixed Capital Formation, Chain Linked Volumes (2015), Million Euro. Available online: https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=namq_10_gdp&lang=en (accessed on 6 November 2021).
- Eurostat, Average Number of Usual Weekly Hours of Work in Main Job, by Sex, Age, Professional Status, Full-Time/Part-Time and Occupation. Available online: https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=lfsa_ewhuis&lang=en (accessed on 6 November 2021).
- IMF. Fiscal Monitor: Policies for the Recovery; IMF: Washington, DC, USA, 2020; pp. 40–41. [Google Scholar]
- Abiad, A.; Furceri, D.; Topalova, D. The Macroeconomic Effects of Public Investment: Evidence from Advanced Economies. J. Macroecon.
**2016**, 50, 224–240. [Google Scholar] [CrossRef] - United Nations. Inter-Agency Task Force on Financing for Development, Financing for Sustainable Development Report 2021; United Nations: New York, NY, USA, 2021. [Google Scholar]

**Figure 3.**HP filter applied to Romania’s gross real fixed capital formation (expressed in logarithms).

Country | Income Group |
---|---|

Bulgaria | Upper middle income |

Czech Republic | High income |

Estonia | High income |

Croatia | High income |

Hungary | High income |

Lithuania | High income |

Latvia | High income |

Poland | High income |

Romania | Upper middle income |

Slovak Republic | High income |

Slovenia | High income |

Public Capital | Depreciation Rate (%) |

Low-income states | 2.5 |

Middle-income states | 3.52 |

High income states | 4.55 |

Privat Capital | Depreciation rate (%) |

Low-income states | 4.25 |

Middle-income states | 5.4 |

High income states | 7 |

Dependent Variable: RECESSION(1) | ||||
---|---|---|---|---|

Method: ML-Binary Probit (Newton–Raphson/Marquardt Steps) | ||||

Date: 29 December 2021 Time: 15:26 | ||||

Sample (Adjusted): 1997Q2 2021Q1 | ||||

Included Observations: 96 after Adjustments | ||||

Convergence Achieved after 5 Iterations | ||||

Coefficient Covariance Computed Using Observed Hessian | ||||

Variable | Coefficient | Std. Error | z-Statistic | Prob. |

D4_Investment | −5.610561 | 1.716525 | −3.268557 | 0.0011 |

C | −0.912263 | 0.177385 | −5.142827 | 0.0000 |

McFadden R-squared | 0.232463 | Mean dependent var | 0.156250 | |

SSD dependent var | 0.364998 | SSE of regression | 0.309223 | |

Akaike info criterion | 0.706966 | Sum squared resid | 8.988176 | |

Schwarz criterion | 0.760390 | Log likelihood | −31.93436 | |

Hannan–Quinn criter. | 0.728561 | Deviance | 63.86873 | |

Restr. deviance | 83.21258 | Restr. Log likelihood | −41.60629 | |

LR statistic | 19.34386 | Avg. log. likelihood | −0.332650 | |

Prob (LR statistic) | 0.000011 | |||

Obs with Dep = 0 | 81 | Total obs | 96 | |

Obs with Dep = 1 | 15 |

Dependent Variable: RECESSION(1) | ||||
---|---|---|---|---|

Method: ML-Binary Probit (Newton–Raphson/Marquardt Steps) | ||||

Date: 29 December 2021 Time: 15:26 | ||||

Sample (Adjusted): 1997Q2 2019Q4 | ||||

Included Observations: 91 after Adjustments | ||||

Convergence Achieved after 6 Iterations | ||||

Coefficient Covariance Computed Using Observed Hessian | ||||

Variable | Coefficient | Std. Error | z-Statistic | Prob. |

D4_Investment | −0.943983 | 0.185773 | −5.081388 | 0.0000 |

C | −6.147621 | 1.878791 | −3.272115 | 0.0011 |

McFadden R-squared | 0.267682 | Mean dependent var | 0.153846 | |

SSD dependent var | 0.362800 | SSE of regression | 0.299490 | |

Akaike info criterion | 0.672758 | Sum squared resid | 7.982800 | |

Schwarz criterion | 0.727942 | Log likelihood | −28.61050 | |

Hannan–Quinn criter. | 0.695021 | Deviance | 57.22099 | |

Restr. deviance | 78.13679 | Restr. Log likelihood | −39.06839 | |

LR statistic | 20.91580 | Avg. log. likelihood | −0.314401 | |

Prob (LR statistic) | 0.000005 | |||

Obs with Dep = 0 | 77 | Total obs | 91 | |

Obs with Dep = 1 | 14 |

Dependent Variable: RECESSION_POLAND(1) | ||||
---|---|---|---|---|

Method: ML-Binary Probit (Newton–Raphson/Marquardt Steps) | ||||

Date: 31 December 2021 Time: 13:54 | ||||

Sample (Adjusted): 1997Q1 2021Q1 | ||||

Included Observations: 97 after Adjustments | ||||

Convergence Achieved after 7 Iterations | ||||

Coefficient Covariance Computed Using Observed Hessian | ||||

Variable | Coefficient | Std. Error | z-Statistic | Prob. |

C | −1.660636 | 0.237238 | −6.999860 | 0.0000 |

D4_POLONIA_INV | −4.129290 | 3.148919 | −1.311336 | 0.1897 |

McFadden R-squared | 0.055768 | Mean dependent var | 0.041237 | |

SSD dependent var | 0.199871 | SSE of regression | 0.200106 | |

Akaike info criterion | 0.365781 | Sum squared resid | 3.804031 | |

Schwarz criterion | 0.418868 | Log likelihood | −15.74038 | |

Hannan–Quinn criter. | 0.387247 | Deviance | 31.48076 | |

Restr. deviance | 33.34007 | Restr. Log likelihood | −16.67003 | |

LR statistic | 1.859310 | Avg. log. likelihood | −0.162272 | |

Prob (LR statistic) | 0.172704 | |||

Obs with Dep = 0 | 93 | Total obs | 97 | |

Obs with Dep = 1 | 4 |

Dependent Variable: RECESSION_POLAND(1) | ||||
---|---|---|---|---|

Method: ML-Binary Probit (Newton–Raphson/Marquardt Steps) | ||||

Date: 31 December 2021 Time: 13:54 | ||||

Sample (Adjusted): 1997Q1 2019Q3 | ||||

Included Observations: 91 after Adjustments | ||||

Convergence Achieved after 7 Iterations | ||||

Coefficient Covariance Computed Using Observed Hessian | ||||

Variable | Coefficient | Std. Error | z-Statistic | Prob. |

C | −1.930476 | 0.306594 | −6.296518 | 0.0000 |

D4_POLONIA_INV | −2.843878 | 4.128670 | −0.688812 | 0.4909 |

McFadden R-squared | 0.025754 | Mean dependent var | 0.021978 | |

SSD dependent var | 0.147424 | SSE of regression | 0.148288 | |

Akaike info criterion | 0.249796 | Sum squared resid | 1.957053 | |

Schwarz criterion | 0.304979 | Log likelihood | −9.365703 | |

Hannan–Quinn criter. | 0.272059 | Deviance | 18.73141 | |

Restr. deviance | 19.22657 | Restr. Log likelihood | −9.613284 | |

LR statistic | 0.495162 | Avg. log. likelihood | −0.102920 | |

Prob (LR statistic) | 0.481634 | |||

Obs with Dep = 0 | 89 | Total obs | 91 | |

Obs with Dep = 1 | 2 |

Pairwise Granger Causality Tests | |||
---|---|---|---|

Date: 2 January 2022 Time: 19:05 | |||

Sample: 1995 2019 | |||

Lags: 2 | |||

Null Hypothesis: | Obs | F-Statistic | Prob. |

DL_PUBLIC_INV_CZ does not Granger Cause DL_PRIVATE_INV_CZ DL_PRIVATE_INV_CZ does not Granger Cause DL_PUBLIC_INV_CZ | 22 | 0.09625 0.84362 | 0.9087 0.4474 |

Dependent Variable: L_PRIVATE_INVESTMENT | ||||
---|---|---|---|---|

Method: Least Squares | ||||

Date: 13 November 2021 Time: 19:31 | ||||

Sample: 1995 2019 | ||||

Included Observations: 25 | ||||

Variable | Coefficient | Std. Error | t-Statistic | Prob. |

C | 9.540681 | 0.081885 | 116.5126 | 0.0000 |

@TREND | 0.055420 | 0.005849 | 9.475127 | 0.0000 |

R-squared | 0.796060 | Mean dependent var | 10.20572 | |

Adjusted R-squared | 0.787193 | SD dependent var | 0.457148 | |

SE of regression | 0.210887 | Akaike info criterion | −0.198369 | |

Sum squared resid | 1.022887 | Schwarz criterion | −0.100859 | |

Log likelihood | 4.479616 | Hannan–Quinn criter. | −0.171324 | |

F-statistic | 89.77803 | Durbin–Watson stat | 0.446135 | |

Prob (F-statistic) | 0.000000 |

Dependent Variable: L_PUBLIC_INVESTMENT | ||||
---|---|---|---|---|

Method: Least Squares | ||||

Date: 13 November 2021 Time: 19:38 | ||||

Sample: 1995 2019 | ||||

Included observations: 25 | ||||

Variable | Coefficient | Std. Error | t-Statistic | Prob. |

C | 7.868426 | 0.153781 | 51.16631 | 0.0000 |

@TREND | 0.049717 | 0.010984 | 4.526123 | 0.0002 |

R-squared | 0.471092 | Mean dependent var | 8.465026 | |

Adjusted R-squared | 0.448096 | SD dependent var | 0.533108 | |

SE of regression | 0.396048 | Akaike info criterion | 1.062054 | |

Sum squared resid | 3.607634 | Schwarz criterion | 1.159564 | |

Log likelihood | −11.27567 | Hannan–Quinn criter. | 1.089099 | |

F-statistic | 20.48579 | Durbin–Watson stat | 0.571870 | |

Prob(F-statistic) | 0.000152 |

Vector Autoregressions Estimates | ||||
---|---|---|---|---|

Date: 21 November 2021 Time: 14:03 | ||||

Sample (Adjusted): 2000 2020 | ||||

Included Observations: 21 after Adjustments | ||||

Standard Errors in ( ) & t-Statistics in [] | ||||

DL_PUBLIC | DL_PRIVAT | DL_HOURS | DL_GDP | |

DL_PUBLIC_CAPITAL(-1) | 0.516006 (0.34066) [1.51471] | 0.426459 (0.23748) [1.79580] | 0.167221 (0.11532) [1.45006] | 0.810452 (0.59114) [1.37100] |

DL_PUBLIC_CAPITAL(-2) | −0.518615 (0.33107) [−1.56650] | −0.432465 (0.23079) [−1.87388] | −0.151487 (0.11207) [−1.35171] | −0.334249 (0.57449) [−0.58182] |

DL_PRIVAT_CAPITAL(-1) | 0.440382 (0.46412) [0.94886] | 0.489976 (0.32353) [1.51445] | −0.116966 (0.15711) [−0.74449] | −1.626517 (0.80536) [−2.01961] |

DL_PRIVAT_CAPITAL(-2) | 0.689089 (0.51140) [1.34746] | 0.401027 (0.35649) [1.12492] | 0.027220 (0.17312) [0.15723] | 0.213343 (0.88741) [0.24041] |

DL_HOURS(-1) | 0.926069 (0.77083) [1.20140] | 0.534705 (0.53734) [0.99509] | −0.186044 (0.26094) [0.71299] | −0.810062 (1.33759) [−0.60561] |

DL_HOURS(-2) | 0.324784 (0.71131) [0.45660] | −0.224068 (0.49585) [-0.45189] | −0.448606 (0.24079) [−1.86307] | 0.620907 (1.23430) [0.50304] |

DL_GDP(-1) | 0.370482 (0.20737) [1.78658] | 0.442688 (0.14456) [3.06237] | -0.014564 (0.07020) [−0.20747] | 0.031538 (0.35984) [0.08764] |

DL_GDP(-2) | −0.125640 (0.17529) [−0.71675] | −0.078020 (0.12220) [−0.63849] | −0.005564 (0.05934) [−0.09377] | 0.349650 (0.30418) [1.14949] |

C | −0.019517 (0.02019) [−0.96652] | −0.007219 (0.01408) [-0.51281] | 0.003013 (0.00684) [0.44073] | 0.076615 (0.03504) [2.18646] |

R-squared | 0.742210 | 0.832922 | 0.363103 | 0.491030 |

Adj. R-squared | 0.570351 | 0.721537 | −0.061495 | 0.151716 |

Sum sq. resids | 0.005535 | 0.002690 | 0.000634 | 0.016666 |

SE equation | 0.021476 | 0.014971 | 0.007270 | 0.037267 |

F-statistic | 4.318697 | 7.477859 | 0.855169 | 1.447128 |

Log likelihood | 56.73518 | 64.31259 | 79.48209 | 45.16083 |

Akaike AIC | −4.546208 | −5.267866 | −6.712580 | −3.443889 |

Schwarz SC | −4.098555 | −4.820213 | −6.264927 | −2.996236 |

Mean dependent | 0.050462 | 0.054912 | −0.001065 | 0.035242 |

SD dependent | 0.032764 | 0.028371 | 0.007056 | 0.040463 |

Determinant resid covariance (dof adj.) | 2.72 × 10^{−15} | |||

Determinant resid covariance | 2.90 × 10^{−16} | |||

Log likelihood | 256.4769 | |||

Akaike information criterion | −20.99780 | |||

Schwarz criterion | −19.20719 | |||

Number of coefficients | 36 |

State/Accumulated Multiplier | 1st Year | 2nd Year | 3rd Year | 4th Year | 5th Year |
---|---|---|---|---|---|

Romania | 0.0380664 | 0.047615263 | −0.006085254 | −0.032724352 | −0.046915966 |

Bulgaria | −0.023112 | −0.038777479 | −0.030410276 | −0.029553438 | −0.026234125 |

Croatia | 0.0011291 | −0.010315389 | −0.020573621 | −0.016055987 | −0.012892889 |

Czech Republic | 0.0152438 | 0.027139093 | 0.033495207 | 0.039055488 | 0.032291796 |

Estonia | −0.035922 | −0.09073286 | −0.121129138 | −0.098857134 | −0.07208992 |

Hungary | 0.0330821 | 0.052849388 | 0.090801964 | 0.110667662 | 0.110677508 |

Latvia | 0.0324911 | −0.005031514 | −0.049024468 | −0.078168318 | −0.099551196 |

Lithuania | 0.0269878 | −0.068627399 | −0.096489559 | −0.09350067 | −0.088594793 |

Poland | 0.0531882 | 0.050200813 | 0.006161929 | −0.016346494 | −0.002735239 |

Slovakia | −0.014631 | −0.035158233 | −0.066331813 | −0.066830568 | −0.062988801 |

Slovenia | −0.014685 | −0.042014749 | −0.056372144 | −0.04791697 | −0.040937891 |

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. |

© 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/).

## Share and Cite

**MDPI and ACS Style**

Ocolișanu, A.; Dobrotă, G.; Dobrotă, D.
The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe. *Sustainability* **2022**, *14*, 8721.
https://doi.org/10.3390/su14148721

**AMA Style**

Ocolișanu A, Dobrotă G, Dobrotă D.
The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe. *Sustainability*. 2022; 14(14):8721.
https://doi.org/10.3390/su14148721

**Chicago/Turabian Style**

Ocolișanu, Andreea, Gabriela Dobrotă, and Dan Dobrotă.
2022. "The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe" *Sustainability* 14, no. 14: 8721.
https://doi.org/10.3390/su14148721