The macroeconomic effects of public investment: Evidence from advanced economies

Abdul Abiad, Furceri (IMF and University of Palermo), Davide and Petia Topalova
Authors registered in the RePEc Author Service: Davide Furceri

Journal of Macroeconomics, 2016, vol. 50, issue C, 224-240

Abstract: 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 as well as 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.

Keywords: Public investment; Fiscal policy; Growth; Debt (search for similar items in EconPapers)
JEL-codes: D84 E32 F02 Q41 Q43 Q48 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (99)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0164070416300374
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Macroeconomic Effects of Public Investment: Evidence from Advanced Economies (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:50:y:2016:i:c:p:224-240

DOI: 10.1016/j.jmacro.2016.07.005

Access Statistics for this article

Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().