The role of government expenditure on private investment has arouse interest in the recent past. The common believe among the policy makers is that government active role in the economy through undertaking well thought public expenditure would crowd in private investment in Kenya. The results has however failed to satisfy their expectations with private investment remaining low over the years and actually below the average for sub Saharan countries. This paper uses VAR approach to examine the impact of the government expenditure on private investment. The findings of the paper is that public expenditure matters in influencing investment. The study recommend proper usage of funds by governmen
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