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Gains from Reducing the Implementation Delays in Public Investment

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  • Murat Ozbilgin

    (Reserve Bank of New Zealand)

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.

Suggested Citation

  • Murat Ozbilgin, 2020. "Gains from Reducing the Implementation Delays in Public Investment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(4), pages 815-847, December.
    • Handle: RePEc:pal:imfecr:v:68:y:2020:i:4:d:10.1057_s41308-020-00112-6
    DOI: 10.1057/s41308-020-00112-6
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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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