The Macroeconomic Effects Of Public Investment
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The Macroeconomic Effects Of Public Investment
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Author : Mr.Abdul Abiad
language : en
Publisher: International Monetary Fund
Release Date : 2015-05-04
The Macroeconomic Effects Of Public Investment written by Mr.Abdul Abiad and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-05-04 with Business & Economics categories.
This paper provides new evidence of the macroeconomic effects of public investment in advanced economies. Using public investment forecast errors to identify the causal effect of government investment in a sample of 17 OECD economies since 1985 and model simulations, the paper finds that increased public investment raises output, both in the short term and in the long term, crowds in private investment, and reduces unemployment. Several factors shape the macroeconomic effects of public investment. When there is economic slack and monetary accommodation, demand effects are stronger, and the public-debt-to-GDP ratio may actually decline. Public investment is also more effective in boosting output in countries with higher public investment efficiency and when it is financed by issuing debt.
The Macroeconomic And Distributional Effects Of Public Investment In Developing Economies
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Author : Davide Furceri
language : en
Publisher: International Monetary Fund
Release Date : 2017-10-20
The Macroeconomic And Distributional Effects Of Public Investment In Developing Economies written by Davide Furceri and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-10-20 with Business & Economics categories.
This paper provides new empirical evidence of the macroeconomic effects of public investment in developing economies. Using public investment forecast errors to identify unanticipated changes in public investment, the paper finds that increased public investment raises output in the short and medium term, with an average short-term fiscal multiplier of about 0.2. We find some evidence that the effects are larger: (i) during periods of slack; (ii) in economies operating with fixed exchange rate regimes; (iii) in more closed economies; (iv) in countries with lower public debt; and (v) in countries with higher investment efficiency. Finally, we show that increases in public investment tend to lower income inequality.
The Macro Economic Effects Of Public Investment
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Author :
language : en
Publisher:
Release Date : 1987
The Macro Economic Effects Of Public Investment written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1987 with categories.
Macroeconomic Challenges Of Structural Transformation
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Author : Lacina Balma
language : en
Publisher: International Monetary Fund
Release Date : 2015-07-20
Macroeconomic Challenges Of Structural Transformation written by Lacina Balma and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-07-20 with Business & Economics categories.
This paper analyzes the link between public investment, economic growth and debt sustainability in Sierra Leone using an inter-temporal macroeconomic model. In the model, public capital improves the productive capacity of private capital, generating positive medium and long term effects to increases in public investment. The model application indicates that a large increase in public investment would have positive macroeconomic effects in the medium term. However, since there is no free lunch, rigidities in tax adjustment would entail unrealistic and unachievable adjustment in the current spending to cover recurrent costs and ensure debt sustainability. A more ambitious increase in public investment would entail more fiscal adjustment, particularly if external commercial loans are secured to complement the adjustment. The model simulations also emphasize the importance of improvements in the structural economic conditions to reap growth dividends. In addition, even if the macroeconomic implications of public investment scaling-up can be favorable in the long term under changes in certain structural conditions, downside risks such as terms of trade shifts and Ebola-induced productivity shortfall expose the country to increased risk of unsustainable debt dynamics. This underscores the need to remove bottlenecks to growth and maintain prudent borrowing policies.
Some Misconceptions About Public Investment Efficiency And Growth
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Author : Mr.Andrew Berg
language : en
Publisher: International Monetary Fund
Release Date : 2015-12-23
Some Misconceptions About Public Investment Efficiency And Growth written by Mr.Andrew Berg and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-12-23 with Business & Economics categories.
We reconsider the macroeconomic implications of public investment efficiency, defined as the ratio between the actual increment to public capital and the amount spent. We show that, in a simple and standard model, increases in public investment spending in inefficient countries do not have a lower impact on growth than in efficient countries, a result confirmed in a simple cross-country regression. This apparently counter-intuitive result, which contrasts with Pritchett (2000) and recent policy analyses, follows directly from the standard assumption that the marginal product of public capital declines with the capital/output ratio. The implication is that efficiency and scarcity of public capital are likely to be inversely related across countries. It follows that both efficiency and the rate of return need to be considered together in assessing the impact of increases in investment, and blanket recommendations against increased public investment spending in inefficient countries need to be reconsidered. Changes in efficiency, in contrast, have direct and potentially powerful impacts on growth: “investing in investing” through structural reforms that increase efficiency, for example, can have very high rates of return.
The Dynamic Macroeconomic Effects Of Public Capital
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Author : Christophe Kamps
language : en
Publisher: Springer Science & Business Media
Release Date : 2004-12-22
The Dynamic Macroeconomic Effects Of Public Capital written by Christophe Kamps and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-12-22 with Business & Economics categories.
This book analyzes the dynamic macroeconomic effects of public capital in industrialized countries. The issue of whether public capital is productive has received a great deal of recent attention. Yet, existing empirical analyses have been limited to a small set of countries. This book presents a new database that provides internationally comparable capital stock estimates for 22 OECD countries for the 1960-2001 period. Building on this database, the book estimates the dynamic effects of public capital using a variety of econometric methods. The results suggest that public capital is productive in OECD countries on average. The theoretical analysis based on a dynamic general equilibrium model shows that the effects of public capital depend crucially on the way the government chooses to finance additional spending.
Public Investment Growth And Debt Sustainability
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Author : Mr.Andrew Berg
language : en
Publisher: International Monetary Fund
Release Date : 2012-06-01
Public Investment Growth And Debt Sustainability written by Mr.Andrew Berg and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-06-01 with Business & Economics categories.
We develop a model to study the macroeconomic effects of public investment surges in low-income countries, making explicit: (i) the investment-growth linkages; (ii) public external and domestic debt accumulation; (iii) the fiscal policy reactions necessary to ensure debt-sustainability; and (iv) the macroeconomic adjustment required to ensure internal and external balance. Well-executed high-yielding public investment programs can substantially raise output and consumption and be self-financing in the long run. However, even if the long run looks good, transition problems can be formidable when concessional financing does not cover the full cost of the investment program. Covering the resulting gap with tax increases or spending cuts requires sharp macroeconomic adjustments, crowding out private investment and consumption and delaying the growth benefits of public investment. Covering the gap with domestic borrowing market is not helpful either: higher domestic rates increase the financing challenge and private investment and consumption are still crowded out. Supplementing with external commercial borrowing, on the other hand, can smooth these difficult adjustments, reconciling the scaling up with feasibility constraints on increases in tax rates. But the strategy may be also risky. With poor execution, sluggish fiscal policy reactions, or persistent negative exogenous shocks, this strategy can easily lead to unsustainable public debt dynamics. Front-loaded investment programs and weak structural conditions (such as low returns to public capital and poor execution of investments) make the fiscal adjustment more challenging and the risks greater.
Uncertainty And Public Investment Multipliers The Role Of Economic Confidence
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Author : William Gbohoui
language : en
Publisher: International Monetary Fund
Release Date : 2021-11-12
Uncertainty And Public Investment Multipliers The Role Of Economic Confidence written by William Gbohoui and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-11-12 with Business & Economics categories.
This paper investigates how macroeconomic uncertainty affects the fiscal multiplier of public investment. In theory, uncertainty can reduce the multiplier if the private sector becomes more cautious and does not respond to the fiscal stimulus. Conversely, it can increase the fiscal multiplier if public investment shocks improve private agents’ expectations about future economic outlook, and lead to larger private spending. Using the disagreement about GDP forecasts as a proxy for uncertainty, we find that unexpected increases in public investment have larger and longer-lasting effects on output, investment, and employment during periods of high uncertainty, with multipliers above 2, and the larger multipliers are not driven by economic slack. Public investment shocks are also found to boost private sector confidence during heightened uncertainty, driving-up expectations about future economic development which in turn magnify private sector response to the initial stimulus.
Improving Public Infrastructure In The Philippines
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Author : Mr.Takuji Komatsuzaki
language : en
Publisher: International Monetary Fund
Release Date : 2016-02-29
Improving Public Infrastructure In The Philippines written by Mr.Takuji Komatsuzaki and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-02-29 with Business & Economics categories.
This paper explores the macroeconomic effects of improving public infrastructure in the Philippines. After benchmarking the Philippines relative to its neighbors in terms of level of public capital and quality of public infrastructure, and public investment efficiency, it uses model simulations to assess the macroeconomic implications of raising public investment and improving public investment efficiency. The main results are as follows: (i) increasing public infrastructure investment results in sustained gains in output; (ii) the effects of improving public investment efficiency are substantial; and (iii) deficit-financed increases in public investment lead to higher borrowing costs that constrain output increases over time, underscoring the importance of revenue mobilization.
Public Investment In Resource Abundant Developing Countries
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Author : Mr.Andrew Berg
language : en
Publisher: International Monetary Fund
Release Date : 2012-11-15
Public Investment In Resource Abundant Developing Countries written by Mr.Andrew Berg and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-11-15 with Business & Economics categories.
Natural resource revenues provide a valuable source to finance public investment in developing countries, which frequently face borrowing constraints and tax revenue mobilization problems. This paper develops a dynamic stochastic small open economy model to analyze the macroeconomic effects of investing natural resource revenues, making explicit the role of pervasive features in these countries including public investment inefficiency, absorptive capacity constraints, Dutch disease, and financing needs to sustain capital. Revenue exhaustibility raises medium-term issues of how to sustain capital built during a windfall, while revenue volatility raises short-term concerns about macroeconomic instability. Using the model, country applications show how combining public investment with a resource fund---a sustainable investing approach---can help address the macroeconomic problems associated with both exhaustibility and volatility. The applications also demonstrate how the model can be used to determine the appropriate magnitude of the investment scaling-up (accounting for the financing needs to sustain capital) and the adequate size of a stabilization fund (buffer).