Flowers vs garbage trucks: which type of local government investment has the greatest impact on economic growth

Łukasz Olejnik

No 2023-084, KAE Working Papers from Warsaw School of Economics, Collegium of Economic Analysis

Abstract: Recently, there has been a rise in research focused on determining the magnitude of the fiscal multiplier. One aspect of this research involves estimating the fiscal multiplier of specific components of government revenues and expenditures and different sub-sectors within the general government sector. The article showcases the results of an analysis that calculates the fiscal multipliers of local government total investments and investments broken down into 10 different categories of investment expenditures, for 73 NUTS-3 sub-regions in Poland over the period from 2007 to 2021. The findings suggest that in the 1-2 years following the initial shock, the accumulated fiscal multipliers of investment expenditures are either insignificant or are significant but less than 1. Contrarily, during the 3-5 year period, the accumulated fiscal multipliers of total investment expenditures and expenditures on road construction show a significant increase, surpassing 1.5. Meanwhile, the fiscal multiplier of investments funded by EU structural funds can reach as high as 3.0.

Keywords: fiscal multiplier; local government investment; fiscal multiplier of disaggregated investment expenditure; local projections (search for similar items in EconPapers)
JEL-codes: E62 H70 R50 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2023-03
New Economics Papers: this item is included in nep-mac, nep-tra and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:sgh:kaewps:2023084

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