Determinants of Aggregate Investment in Brazil during the period 1995-2013

Abstract

The aim of the article was to identify the determinants of aggregate investment in Brazil in the period 1995-2013. Initially we conducted a panorama of recent developments in private investment in the country and its importance for economic development. The article also presents the main theories on investment as well as a brief survey of the main empirical studies already undertaken on the subject. From the empirical results and the Keynesian and neoclassical theories of investment, the econometric model with Autoregressive Distributed Lags (ARDL) was formulated. The results showed that the GDP, taxes, interest rates, loans and past investments determined the aggregate investment in Brazil during the studied period, getting signs of the estimated coefficients consistent with economic theory. The results also indicated that lower Brazilian tax burden without obtaining primary deficits and with better allocation of resources, together with the reduction of the interest rate that does not generate inflationary pressure, and commitment to permanent political and economic development programs are ways to foster Brazilian investment.

Keywords

• Investment
• Brazil
• GPD
• Interest Rates
• Tax Burden