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Impact of Monetary Policy on Private Investment: Evidence from Vietnam’s Provincial Data

by 1,†, 2,*,† and 1,†
1
Institute for Indian and Southwest Asian Studies, Vietnam Academy of Social Sciences, Hanoi 100000, Vietnam
2
Research Institute for Banking, Vietnam Banking Academy, Hanoi 100000, Vietnam
*
Author to whom correspondence should be addressed.
Contributions to the research work: T.T.D., 40%; A.D.P., 40%; D.N.T., 20%.
Economies 2020, 8(3), 70; https://doi.org/10.3390/economies8030070
Received: 25 July 2020 / Revised: 20 August 2020 / Accepted: 24 August 2020 / Published: 1 September 2020
(This article belongs to the Special Issue The Application of Time Series Analysis in Economic Growth)
This study sheds new light on the relationship between monetary policy and private investment using Vietnam’s provincial data and a system generalized method of moment (GMM) framework. To capture monetary policy’s effect, different indicators, viz. money supply, domestic credit to the private sector, interest rate and exchange rate are examined. We find that private investment is positively affected by respective monetary policies through broad money, domestic credit and interest rate channels, yet no credible evidence regarding the exchange rate’s effect. In which, such a surprising co-movement between real interest rate and private investment was illuminated through analysis of the economy’s distinctive characteristics over the two development stages (pre- and post-2012). Another notable finding is that economic development prospects of localities, which attract great attention and cause an intense competition between domestic and foreign investors, appear to be a major barrier to investment decisions of private firms. View Full-Text
Keywords: monetary policy; private investment; system GMM; emerging market economies monetary policy; private investment; system GMM; emerging market economies
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MDPI and ACS Style

Dang, T.T.; Pham, A.D.; Tran, D.N. Impact of Monetary Policy on Private Investment: Evidence from Vietnam’s Provincial Data. Economies 2020, 8, 70. https://doi.org/10.3390/economies8030070

AMA Style

Dang TT, Pham AD, Tran DN. Impact of Monetary Policy on Private Investment: Evidence from Vietnam’s Provincial Data. Economies. 2020; 8(3):70. https://doi.org/10.3390/economies8030070

Chicago/Turabian Style

Dang, Thuy T.; Pham, Anh D.; Tran, Diem N. 2020. "Impact of Monetary Policy on Private Investment: Evidence from Vietnam’s Provincial Data" Economies 8, no. 3: 70. https://doi.org/10.3390/economies8030070

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