Macroeconomic Uncertainty, Consumer Sentiments, Consumption Expenditures And US Fixed Private Investment Growth

Abstract

Using Johansen Cointegration and Error Correction frameworks, as well as Granger Causality test Procedures, this study analyze both short and long-run relationships, and direction of causal association between US fixed private investment growth and selected explanatory variables. Test results based on quarterly time series data spanning the period (1960 -2010) shows deviations from equilibrium in fixed private investment growth tend to be corrected relatively faster than this study expected. This study also finds significant long-run and causal relationships between macroeconomic uncertainty, consumer sentiments, growth in consumption expenditures, and US fixed private investment growth.