TY - BOOK ID - 133415244 TI - Is the Public Investment Multiplier Higher in Developing Countries? An Empirical Exploration AU - Izquierdo, Alejandro. AU - Lama, Ruy. AU - Medina, Juan. AU - Puig, Jorge. AU - Riera-Crichton, Daniel. AU - VĂ©gh Gramont, Carlos. AU - Vuletin, Guillermo Javier. PY - 2019 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Investments: General KW - Investments: Stocks KW - Macroeconomics KW - Public Finance KW - Investment KW - Capital KW - Intangible Capital KW - Capacity KW - Business Fluctuations KW - Cycles KW - Fiscal Policy KW - National Government Expenditures and Related Policies: Infrastructures KW - Other Public Investment and Capital Stock KW - Pension Funds KW - Non-bank Financial Institutions KW - Financial Instruments KW - Institutional Investors KW - National Government Expenditures and Related Policies: General KW - Macroeconomics: Consumption KW - Saving KW - Wealth KW - Public finance & taxation KW - Investment & securities KW - Public investment spending KW - Stocks KW - Expenditure KW - Government consumption KW - Private investment KW - Financial institutions KW - National accounts KW - Public investments KW - Expenditures, Public KW - Consumption KW - Economics KW - Saving and investment KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:133415244 AB - 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 seems robust to the sample (European countries, U.S. states, and Argentine provinces) and to the identification method (Blanchard-Perotti, forecast errors, and instrumental variables). Our results thus suggest that public investment in developing countries would carry high returns. ER -