The Relationship between Investment and Output

  • Hina Ali The Women University, Multan, Pakistan.
  • Dr.Imran Sharif Chaudhry Chairman Department of Economics. Bahauddin Zakariya University, Multan, Pakistan.
  • Huma Ali Al-Falah Institute of Banking and Finance, Bahauddin Zakariya University, Multan, Pakistan.
Keywords: Investment, Saving, Economic Growth, Pakistan.

Abstract

A country faces fiscal deficit when the payments exceeds receipts. The two essential elements of fiscal policy are Government spending and taxes. The relationship between investment and output is investigated by constructing model of single equation. The economys output level is completely depends on the level of investment made within an economy. The aggregate demand shocks enhance the profitability of the investment, which leads to change in demand for labor and hence positively affect the output level. OLS technique is applied to estimate the model of this study. The results obtained are significant as coefficient of GDP is 4.51 at 1% level. It shows one unit change in GDP brings 4.51 units change in investment. The result of this study shows the negative link between investment and imports of an economy as imports have insignificant coefficient. The coefficient of saving is 0.61 and it is significant and positively related to the economic growth.

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Author Biographies

Hina Ali, The Women University, Multan, Pakistan.
Lecturer, Department of Economics.
Huma Ali, Al-Falah Institute of Banking and Finance, Bahauddin Zakariya University, Multan, Pakistan.
Lecturer.

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Published
2015-07-19
How to Cite
Ali, H., Sharif Chaudhry, D., & Ali, H. (2015). The Relationship between Investment and Output. Journal of Research in Business, Economics and Management, 3(3), 210-213. Retrieved from http://scitecresearch.com/journals/index.php/jrbem/article/view/283
Issue
Vol 3 No 3: JRBEM
Section
Articles

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