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On the economic and fiscal effects of infrastructure investment in Brazil

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  • Ferreira, Pedro Cavalcanti
  • Araújo, Carlos Hamilton Vasconcelos

Abstract

This article studies the productive impact of infrastructure investment in Brazil. Public-capital expenditures in the country have decreased continuously over the last two decades, and this paper shows the significant impact this has had on infrastructure stocks. Cointegration analysis is used to investigate the long-run association between output and infrastructure, the results being then used to study the short-run dynamic of these variables. Whether in the short or long run, the productive impact of infrastructure was found to be relevant. Other group of simulations studies the impact of expanding capital expenditures through debt finance on debt to GDP ratio as well as on public cash áow and net worth.

Suggested Citation

  • Ferreira, Pedro Cavalcanti & Araújo, Carlos Hamilton Vasconcelos, 2006. "On the economic and fiscal effects of infrastructure investment in Brazil," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 613, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  • Handle: RePEc:fgv:epgewp:613
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    References listed on IDEAS

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    1. Canning, David & Bennathan, Esra, 2000. "The social rate of return on infrastructure investments," Policy Research Working Paper Series 2390, The World Bank.
    2. Pritchett, Lant, 2000. "The Tyranny of Concepts: CUDIE (Cumulated, Depreciated, Investment Effort) Is Not Capital," Journal of Economic Growth, Springer, vol. 5(4), pages 361-384, December.
    3. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, pages 177-200.
    4. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    5. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
    6. Nouriel Roubini & Jeffrey Sachs, 1989. "Government Spending and Budget Deficits in the Industrial Economies," NBER Working Papers 2919, National Bureau of Economic Research, Inc.
    7. Mintz, Jack M. & Smart, Michael, 2006. "Incentives for public investment under fiscal rules," Policy Research Working Paper Series 3860, The World Bank.
    8. Roberto Perotti, 2004. "Public investment: another (different) look," Working Papers 277, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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    Citations

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    Cited by:

    1. Aloisio Araujo & Mario Pascoa & Juan Pablo Torres-Martinez, 2005. "Bubbles, collateral and monetary equilibrium," Textos para discussão 513, Department of Economics PUC-Rio (Brazil).
    2. Semmler, Willi & Greiner, Alfred & Diallo, Bobo & Rezai, Armon & Rajaram, Anand, 2007. "Fiscal policy, public expenditure composition, and growth theory and empirics," Policy Research Working Paper Series 4405, The World Bank.
    3. Renato G. Flôres & Maria Paula Fontoura & Rogério Guerra Santos, 2007. "Foreign Direct Investment Spillovers in Portugal: Additional Lessons from a Country Study," The European Journal of Development Research, Taylor and Francis Journals, vol. 19(3), pages 372-390.
    4. Perotti, Roberto, 2007. "Fiscal policy in developing countries : a framework and some questions," Policy Research Working Paper Series 4365, The World Bank.
    5. William Easterly & Timothy Irwin & Luis Servén, 2008. "Walking up the Down Escalator: Public Investment and Fiscal Stability," World Bank Research Observer, World Bank Group, vol. 23(1), pages 37-56, January.
    6. Monteiro, Paulo Klinger, 2009. "First-price auction symmetric equilibria with a general distribution," Games and Economic Behavior, Elsevier, vol. 65(1), pages 256-269, January.
    7. Ferreira, Pedro Cavalcanti & Pereira, Ricardo A. de castro, 2008. "Efeitos de Crescimento e Bem-estar da Lei de Parceria Público-Privada no Brasil," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 62(2), October.
    8. Vladimir Kühl Teles & Caio Cesar Mussolini, 2012. "Infrastructure and productivity in Latin America: is there a relationship in the long run?," Journal of Economic Studies, Emerald Group Publishing, vol. 39(1), pages 44-62, January.
    9. Calderon, Cesar & Serven, Luis, 2010. "Infrastructure in Latin America," Policy Research Working Paper Series 5317, The World Bank.
    10. World Bank, 2008. "Brazil : Evaluating the Macroeconomic and Distributional Impacts of Lowering Transportation Costs," World Bank Other Operational Studies 8083, The World Bank.

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