Title: Causal Relationship between Public Investment and Economic Growth: Evidence from Bangladesh
Abstract: The paper explores the causal relationship between public investments and economic growth in the case of Bangladesh in the period 1976 -2014, using a Vector Autoregression Model (VAR).Based on literature review, the model also includes private investment, inflation, real interest rate, money supply, and foreign direct investment besides public investment.The GDP growth rate is used as a measure of economic growth, but public investment along with private investment, money supply, and foreign direct investment is expressed as ratios of GDP.Our ECM model estimates indicate the existence of a long-run relationship between public investment and economic growth.According to the grander causality test this study shows that there exists no short run causal relationship between public investment and economic growth.