Gains from Reducing the Implementation Delays in Public Investment

Hüseyin Özbilgin

IMF Economic Review, 2020, vol. 68, issue 4, No 3, 815-847

Abstract: Abstract This paper studies the welfare impact of reducing delays in the implementation of public investment projects, using Turkish data pertaining to a revealed policy action in the early 2000s. I find that the reduction in the completion duration of the public capital from 11 to 4 years corresponds to a welfare gain of 1.9% in terms of compensating variations in consumption and an output gain of 2.7%. When most public investment management reforms are akin to a permanent positive marginal efficiency shock, I show that the elimination of implementation delays are similar to a cut in public capital “tax.” Lastly, I find that the potential gains from a similar reform are considerable for some other emerging market economies.

JEL-codes: E22 E62 H30 H54 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1057/s41308-020-00112-6

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