An Empirical Analysis of the Determinants of Private Investment in SouthKorea: using Nonlinear Model Analysis

This paper investigates the determinants pattern of the private investment as an attempt todiscover why the level of private investment is relatively high in south east asia using south koreaas a case study. the study exploits nonlinear autoregressive distributed lag model as method ofanalyses. the empirical result indicates that the positive shock of inflation is becoming moreinfluential on private investment promotion than the negative shock in the long-run. furthermore,this study has confirmed the crowding-in relationship between the public spending and the privateinvestment in south korea. since the crucial role of credit for the private sector, the credit providedfor the private sector shows a negative linkage with private investment in the long-run, while theshort-run analysis indicates a positive effect on the private investment. the implications from thisstudy are the government should pay attention to the public expenditure issue, and ensure thatspending is more productive in form of investment