scholarly journals Public Infrastructure Investment, Output Dynamics, and Balanced Budget Fiscal Rules

2011 ◽  
Author(s):  
Pedro Bom ◽  
Jenny E. Ligthart
Keyword(s):  
Fiscal Rules ◽  
Infrastructure Investment ◽  
Public Infrastructure ◽  
Balanced Budget

Public infrastructure investment and fiscal sustainability in Latin America: incompatible goals?

2014 ◽  
Vol 41 (1) ◽  
pp. 29-50 ◽  
Author(s):  
Luis Carranza ◽  
Christian Daude ◽  
Angel Melguizo
Keyword(s):  
Developing Countries ◽  
Latin America ◽  
Latin American ◽  
Public Investment ◽  
Fiscal Rules ◽  
Infrastructure Investment ◽  
Fiscal Consolidation ◽  
Public Infrastructure ◽  
Content Type ◽  
Fiscal Space

Purpose – This paper aims to understand the relationship in developing countries between fiscal consolidation and public investment – a flexible part of the budget that is easier to cut during consolidation effort, but with potentially negative growth effects. Analyzing in detail the case of Peru, the paper explores alternative fiscal rules and frameworks that might help create fiscal space for infrastructure investment. Design/methodology/approach – The paper analyses trends in public and total infrastructure investment in six large Latin American economies, in the light of fiscal developments since the early 1980s. In particular, the paper explores the association between fiscal consolidations (improvements in the structural fiscal balance) and public infrastructure investment rates. In the second part, the paper analyzes recent changes in the fiscal framework of Peru and shows how they were conductive in creating additional fiscal space. Findings – The authors argue that post-crisis fiscal frameworks, notably fiscal rules that are increasingly popular in the region, should not only consolidate the recent progress towards debt sustainability, but also create the fiscal space to close these infrastructure gaps. These points are illustrated in a detailed account of recent developments in the fiscal framework and public investment in the Peruvian case. Originality/value – The paper contributes new evidence to the literature on fiscal consolidation and the composition of government expenditures. While the literature based on evidence from the 1990s has argued that fiscal consolidation plans in Latin America have almost always led to a significant reduction in public infrastructure investment, the paper finds less clear cut evidence when extending the analysis backwards (1980s) and forwards (2000s). The example of the case of Peru is used to explore fiscal institutions and rules that might be useful for other developing countries that face important infrastructure gaps.

scholarly journals Government public infrastructure investment and economic performance in Spain (1980-2016)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jose Perez-Montiel ◽  
Carles Manera
Keyword(s):  
Public Investment ◽  
Infrastructure Investment ◽  
Annual Data ◽  
Public Infrastructure ◽  
Cross Sectional ◽  
Content Type ◽  
Autonomous Communities ◽  
Vector Autoregressive ◽  
Acyclic Graphs ◽  
Multiplier Effects

Purpose The authors estimate the multiplier effect of government public infrastructure investment in Spain. This paper aims to use annual data of the 17 Spanish autonomous communities for the 1980–2016 period. Design/methodology/approach The authors use dynamic acyclic graphs and the heterogeneous panel structural vector autoregressive (P-SVAR) method of Pedroni (2013). This method is robust to cross-sectional heterogeneity and dependence, which are present in the data. Findings The findings suggest that an increase in the level of government public infrastructure investment generates a positive and persistent effect on the level of output. Five years after the fiscal expansion, the multiplier effects of government public infrastructure investment reach values above one. This confirms that government public infrastructure investment expansions have Keynesian effects. The authors also find that the multiplier effects differ between autonomous communities with above-average and below-average GDP per capita. Originality/value To the best of the authors’ knowledge, no research uses dynamic acyclic graphs and heterogeneous P-SVAR techniques to estimate fiscal multipliers of government public investment in Spain by using subnational data.

Regional allocation of public infrastructure investment: The case of Greece

2005 ◽  
Vol 39 (9) ◽  
pp. 1231-1244 ◽  
Author(s):  
Matthew Lambrinidis ◽  
Yannis Psycharis ◽  
Antonis Rovolis
Keyword(s):  
Infrastructure Investment ◽  
Public Infrastructure ◽  
Of Greece ◽  
Regional Allocation

scholarly journals Public Infrastructure and Economic Takeoff

2020 ◽  
Vol 10 (1) ◽  
pp. 313
Author(s):  
Prakash Chandra Sapkota
Keyword(s):  
Threshold Level ◽  
Infrastructure Investment ◽  
Public Infrastructure ◽  
Effective Tax Rate ◽  
Overlapping Generations Model ◽  
Tax Rate ◽  
Output Elasticity ◽  
Saving Rates ◽  
Modern Technologies

The purpose of this paper is to incorporate the role of public infrastructure investment on economic takeoff process in underdeveloped and emerging economies in a dynamic general equilibrium model. We use a two-period overlapping generations model, and consider two types of technologies (traditional and modern) that are used to produce the final output of firms. This paper confirms that economic takeoff is possible only when the capital per labor unit exceeds a certain threshold level. Thus, the takeoff process depends on the productivity race between traditional and modern technologies with increasing public infrastructure investment, while public infrastructures foster the productivity of both technologies. Similarly, an effective tax rate supports the takeoff process by stimulating the wage rate which in turn increases the capital per labor along with the saving rates. Hence, we clarify the conditions required for succeeding in the takeoff of an economy. In addition, we review some empirical evidence related to the output elasticity of public infrastructures.

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