INTERNATIONAL LIQUIDITY AND GROSS FIXED CAPITAL FORMATION: ECONOMETRIC EVIDENCE FOR DEVELOPED AND DEVELOPING ECONOMIES

Abstract

This paper consists of empirical research on the relevance of international liquidity in determining investment. Particularly, we tests if  international liquidity effects on investment in developed countries is different from those in developing ones, where National Innovation System (SI) is not relatively developed. The analysis is done by an econometric estimation using the panel corrected standard errors (PCSE) method, which is adequate to deal with panel data. This model presents theoretical background as the post Keynesian approach. The results confirm that in developing economies fluctuations in investment are more dependent on international liquidity cycle when compared to developed countries.