The impact of public expenditure on private investment in agriculture: Crowding in or crowding out? Evidence from Azerbaijan

This paper aims to conduct an empirical enquiry into determining the impact of public expenditure on private investment in agriculture to discover as to whether the former casts a crowding-in or crowding-out effect on the latter, simultaneously controlling for the oil-related factors which are oil price and oil production in the case of Azerbaijan. The Autoregressive Distributed Lag Bounds Testing (ARDLBT) approach to cointegration has been applied by means of employing the quarterly data for the period 2001Q4–2017Q3. The results manifest that public expenditure crowds in private investment to agriculture in the long-run, demonstrating both strong statistical and economic significance. The empirical findings obtained herein are beneficial for the policy-making purposes, and the meagreness of the related literature concerning Azerbaijan makes us deduce that further empirical research should be implemented.