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Public Investment As a Fiscal Stimulus

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Author Info

  • Anita Tuladhar
  • Markus Bruckner

Abstract

How effective was public investment in stimulating the Japanese economy during the economic stagnation of the 1990s? Using a dataset of regional public investment spending, we find that investment multipliers were higher than for public consumption, although they were relatively low and declining over time. The paper also finds that the effectiveness of economic infrastructure investment, implemented mainly by the central government, is lower than that of social investment mostly undertaken by local governments. These results suggest that while public investment may yield higher output effects than other spending, its effectiveness depends upon its composition, the level of government implementation, and supply side factors.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/110.

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Length: 34
Date of creation: 01 Apr 2010
Date of revision:
Handle: RePEc:imf:imfwpa:10/110

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Keywords: Economic models; Governance; Government expenditures; Public investment; private investment; government expenditure; fiscal policy; fiscal stimulus; government spending; tax revenue; investment spending; multiplier effect; local government expenditures; local government expenditure; public debt; public investment spending; tax revenues; tax cuts; public spending; investment expenditures; fiscal variables; fiscal expansion; public expenditure; fiscal multipliers; private capital; tax cut; fiscal shocks; fiscal policies; tax reform; fiscal multiplier; local government spending; budget deficits; fixed capital; fiscal balance; government deficit; credit guarantees; expenditure policy; investors; levels of public spending; public expenditures; risk premium; general government expenditures; expenditure on investment; investment growth; aggregate government expenditure; rate of return; fiscal sustainability; fiscal stimuli; distribution of income; budget process; public deficits; fiscal stimulus package; social security spending; fiscal stance; fiscal affairs; impact of public spending; increase in government expenditure; tax burden; government spending multipliers; share of public spending; investment projects; fiscal spending; fiscal deficit; size of multipliers; rates of return; fiscal affairs department; institutional investors;

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References

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  18. Evi Pappa, 2009. "The Effects Of Fiscal Shocks On Employment And The Real Wage," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 217-244, 02.
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Cited by:
  1. Yoshito Funashima, 2012. "The effects of public investment smoothing as a stimulus measure on construction industry in Japan," Economics Bulletin, AccessEcon, vol. 32(3), pages 1992-2006.

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