cover image: Revisiting Public Investment Multipliers : Nonlinear Effects of the Business Cycle, Fiscal Space, Efficiency, and Capital Stock (English)

20.500.12592/41iom0g

Revisiting Public Investment Multipliers : Nonlinear Effects of the Business Cycle, Fiscal Space, Efficiency, and Capital Stock (English)

22 Oct 2024

The paper examines the macroeconomic effects of public investment in emerging market and developing economies. To this end, the analysis develops a new measure of public investment shocks based on cyclically adjusted government investment. Estimations using local projections based on a large sample of 129 countries over 1980-2019 suggest that public investment can significantly boost economic growth: an increase in public investment by 1 percent of gross domestic product raises output by 1.1 percent after five years, on average. However, the effects are much larger when public investment spending is efficient and fiscal space is ample-reaching up to 1.6 percent over the same period. Public investment multipliers tend to be larger during recessions and in capital-scarce economies. The paper also finds that public investment can crowd in private investment, as well as boost productivity and potential output.
inclusive growth disaster risk management public finance fiscal policy economic policy green growth investment promotion private sector development fiscal sustainability expenditure efficiency other business environment government expenditure world public finance management public investment management urban and rural development macroeconomic and structural policies public sector management investment policy and promotion competitive industries domestic revenue administration central government central agencies economic growth and planning macroeconomic & structural policy modelling

Authors

Adarov,Amat, Clements,Benedict Joseph, Jalles,João Tovar

DOI
https://dx.doi.org/10.1596/1813-9450-10954
Disclosure Date
2024/10/22
Disclosure Status
Disclosed
Doc Name
Revisiting Public Investment Multipliers : Nonlinear Effects of the Business Cycle, Fiscal Space, Efficiency, and Capital Stock
Originating Unit
Off of Sr VP Dev Econ/Chief Econ (DECVP)
Pages
37
Product Line
Advisory Services & Analytics
Published in
United States of America
Rel Proj ID
1W-Foundations For Robust Growth In The Face Of Shocks -- P179658
Series Name
Policy Research working paper; PROSPERITY;
TF No/Name
TF0C0269-Foundations for Robust Growth in the Face of Shocks
Unit Owning
Prospects Group (DECPG)
Version Type
Final
Volume No
1

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