Relationship Between Macroeconomic Stability and Private Investment Flows: Evidence from An Emerging Country (Peru, ‎‎1991-2022)‎

  • Authors

    • Roger Rurush Asencio Universidad Nacional Santiago Antunez de Mayolo, Huaraz, Peru
    • Edwin Ramirez Asis Universidad Cientifica del Sur, Lima, Perú
    • Jorge Manrique Cáceres Universidad Nacional Santiago Antunez de Mayolo, Huaraz, Peru
    • Samer Ajour El-Zein EAE Business School, Barcelona, España
    https://doi.org/10.14419/vky3p104

    Received date: July 16, 2025

    Accepted date: August 17, 2025

    Published date: October 10, 2025

  • Developing, Economic Stability; Macroeconomic, Private Investment, Political

  • Abstract

    This study investigates the relationship between macroeconomic stability and private investment flows in Peru between 1991 and 2022. The ‎analysis addresses a key policy question for emerging economies: how fluctuations in growth, inflation, fiscal deficits, and exchange rates ‎influence investor behavior and long-term capital formation. Using annual time-series data from the Central Reserve Bank of Peru, the study ‎applies unit root tests, cointegration analysis, and error correction models (ECM) to examine both short-term adjustments and long-term ‎equilibrium relationships. The methodological choice highlights the advantages of dynamic econometric techniques over correlational ‎approaches used in prior studies. The findings indicate that GDP growth has a strong positive effect on private investment: a 4% rise in ‎GDP is associated with a 6% increase in private investment. Exchange rate stability also matters, with private investment rising 0.57% for ‎every 1% increase in the exchange rate. In contrast, inflation and large fiscal deficits exert a dampening effect on investment. These results ‎align with Tobin’s Q theory of investment, neoclassical perspectives on capital accumulation, and Keynesian arguments about uncertainty. ‎The results underscore those stable macroeconomic conditions, particularly fiscal discipline and controlled inflation, create a favorable climate ‎for entrepreneurs, lenders, and foreign investors. Beyond economics, these findings have implications for accounting and financial ‎reporting, as fiscal credibility and deficit management influence corporate disclosures, investor risk assessments, and capital allocation ‎decisions. Peru’s experience demonstrates how macroeconomic stability fosters sustained private investment, with lessons applicable to ‎other emerging economies in Latin America and beyond‎.

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  • How to Cite

    Asencio , R. R. ., Asis, E. R. ., Cáceres , J. M. ., & El-Zein , S. A. . (2025). Relationship Between Macroeconomic Stability and Private Investment Flows: Evidence from An Emerging Country (Peru, ‎‎1991-2022)‎. International Journal of Accounting and Economics Studies, 12(6), 364-372. https://doi.org/10.14419/vky3p104