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 (M&E) 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 (the equipment leasing, the demand (sum of consumptions and exports), the long-term interest rate and the industrial production index)