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Growth Effects of Public Investment and Public Consumption: The Role of the Business Cycle, Fiscal Space, and Efficiency

Orador convidado

João Jalles (ISEG)

Local

Sala -1.26 EEG & Online

Data

Início05.06.2024 13:15Fim05.06.2024 14:15

Resumo do evento

Abstract:
The paper analyzes the growth impact of public spending, differentiating between public
investment and consumption shocks. To this end we develop a new measure of public spending
shocks based on cyclically adjusted government investment and consumption data. Estimations
using local projections based on a global sample of countries over the period 1980-2021
suggest that public investment shocks play a much greater role in boosting economic growth
in comparison with public consumption shocks. Public investment multipliers also tend to be
greater during recessions and in countries with greater fiscal space and higher public
investment efficiency. While public investment shocks have a strong effect, on average, on
economic growth in emerging market and developing economies, the impact is heterogeneous
across countries. In particular, public spending multipliers are not significant in energyexporting countries.

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