THE CONTRIBUTION OF EQUIPMENT LEASING IN THE ERROR-CORRECTION MODEL OF INVESTMENT IN MACHINERY AND EQUIPMENT: EVIDENCE FROM ITALY

Several studies have shown a positive correlation between investment in machinery and equipment and economic growth. For this reason, it is very important for policy-makers to study the dynamics of investments and their expected evolution over time through forecast scenarios. The paper aims to present an error-correction model of investment in machinery and equipment at current price with a focus on the contribution of equipment leasing. The main empirical results of the model with equipment leasing as exogenous show that the variable explains 96% of the investment variability and, that as leasing grows by 1 percentage point, investment grows by 0.3%; the elasticity is reduced to 0.2 in the model with all the exogenous variables taken into account (equipment leasing, demand (defined as sum of consumptions and exports), long-term interest rate and industrial production index).