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Biography:
João Tovar Jalles is an Economist, University Professor and Consultant. Currently he is Assistant Professor of Macroeconomics at ISEG – University of Lisbon. Before he was a Senior Economist at the Portuguese Public Finance Council. Previously he spent 5 years at the IMF: 1 year in the Research Department and 4 years in the Fiscal Affairs Department, where he participated in numerous negotiation, review and technical assistance missions.
Before joining the Fund, João was an Economist at the OECD’s Economics Department and before that a Fiscal Economist at the ECB’s Fiscal Policies Division.
João was a Visiting Scholar at the IMF’s Research Department and a Visiting Researcher at the Bank of Portugal’s Research Department. He also has acted as consultant and expert to national and international organizations on several ocasions.
Abstract:
The paper examines the macroeconomic effects of public investment in emerging market and developing economies. To this end the analysis develops a new measure of public investment shocks based on cyclically adjusted government investment. Estimations using local projections based on a large sample of 129 countries over the period 1980-2019 suggest that public investment can significantly boost economic growth: an increase in public investment by one percent of GDP raises real output by 1.1 percent after five years, on average. However, the effects are much larger when public investment spending is efficient and fiscal space is ample—reaching up to 1.6 percent over the same period. Public investment multipliers tend to be larger during recessions and in capital-scarce economies. The paper also finds that public investment can crowd in private investment, boost productivity and potential output.
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