NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Juan Pablo Medina

Universidad Adolfo IbaƱez
Diagonal Las Torres 2640
Santiago
Chile

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Universidad Adolfo Ibanez

NBER Working Papers and Publications

November 2019Is the Public Investment Multiplier Higher in Developing Countries? An Empirical Investigation
with Alejandro Izquierdo, Ruy E. Lama, Jorge P. Puig, Daniel Riera-Crichton, Carlos A. Vegh, Guillermo Vuletin: w26478
Over the last decade, empirical studies analyzing macroeconomic conditions that may affect the size of government spending multipliers have flourished. Yet, in spite of their obvious public policy importance, little is known about public investment multipliers. In particular, the clear theoretical implication that public investment multipliers should be higher (lower) the lower (higher) is the initial stock of public capital has not, to the best of our knowledge, been tested. This paper tackles this empirical challenge and finds robust evidence in favor of the above hypothesis: countries with a low initial stock of public capital (as a proportion of GDP) have significantly higher public investment multipliers than countries with a high initial stock of public capital. This key finding seem...
 
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