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Public Investment in Infrastructure in Latin America: Is Debt the Culprit?

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  • Eduardo Lora

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Abstract

Panel data for seven Latin American countries are used to assess the influence of public indebtedness on public investment in infrastructure in the period 1987-2001. Debt increases are associated with higher public infrastructure investment, an effect that is robust to the inclusion of many other fiscal and macroeconomic variables. This paper also finds some evidence of complementarity between public and private investment and of the negative effect of IMF adjustment loans on infrastructure expenditures. No evidence is found that debt defaults affect public investment in infrastructure

Suggested Citation

  • Eduardo Lora, 2007. "Public Investment in Infrastructure in Latin America: Is Debt the Culprit?," Research Department Publications 4502, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4502
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    References listed on IDEAS

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    1. Dijkstra, Geske & Hermes, Niels, 2001. "The Uncertainty of Debt Service Payments and Economic Growth of HIPCs: Is there a Case for Debt Relief?," WIDER Working Paper Series 122, World Institute for Development Economic Research (UNU-WIDER).
    2. Dany Jaimovich & Ugo Panizza, 2010. "Public debt around the world: a new data set of central government debt," Applied Economics Letters, Taylor & Francis Journals, vol. 17(1), pages 19-24, January.
    3. Eduardo Lora, 2007. "La vulnerabilidad fiscal del gasto social: ¿Es Diferente América Latina?," Research Department Publications 4506, Inter-American Development Bank, Research Department.
    4. Eduardo Lora, 2009. "La Vulnerabilidad Fiscal del Gasto Social: ¿Es diferente América Latina?," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 24(1), pages 3-20, Junio.
    5. Mahdavi, Saeid, 2004. "Shifts in the Composition of Government Spending in Response to External Debt Burden," World Development, Elsevier, vol. 32(7), pages 1139-1157, July.
    6. Helene Poirson Ward & Luca A Ricci & Catherine A Pattillo, 2004. "What Are the Channels Through Which External Debt Affects Growth?," IMF Working Papers 04/15, International Monetary Fund.
    7. Eduardo Lora, 2009. "La Vulnerabilidad Fiscal del Gasto Social: ¿Es diferente América Latina?," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 24(1), pages 3-20, Junio.
    8. Lora, Eduardo & Olivera, Mauricio, 2007. "Public debt and social expenditure: Friends or foes?," Emerging Markets Review, Elsevier, vol. 8(4), pages 299-310, December.
    9. Agenor, Pierre-Richard & Moreno-Dodson, Blanca, 2006. "Public infrastructure and growth : new channels and policy implications," Policy Research Working Paper Series 4064, The World Bank.
    10. Dany Jaimovich & Ugo Panizza, 2010. "Public debt around the world: a new data set of central government debt," Applied Economics Letters, Taylor & Francis Journals, vol. 17(1), pages 19-24, January.
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    Cited by:

    1. Cavallo, Eduardo & Daude, Christian, 2011. "Public investment in developing countries: A blessing or a curse?," Journal of Comparative Economics, Elsevier, pages 65-81.
    2. Eduardo A. Cavallo & Tomás Serebrisky & Verónica Frisancho & Jonathan Karver & Andrew Powell & Diego Margot & Ancor Suárez-Alemán & Eduardo Fernández-Arias & Matías Marzani & Solange Berstein & Marian, 2016. "Saving for Development: How Latin America and the Caribbean Can Save More and Better," IDB Publications (Books), Inter-American Development Bank, number 94597 edited by Eduardo A. Cavallo & Tomás Serebrisky, February.
    3. Eduardo A. Cavallo & Andrew Powell & Roberto Rigobón, 2008. "Do Credit Rating Agencies Add Value?: Evidence from the Sovereign Rating Business Institutions," IDB Publications (Working Papers) 1634, Inter-American Development Bank.
    4. Ramón Espinasa, 2008. "Prospects for the Oil-importing Countries of the Caribbean," Research Department Publications 2007, Inter-American Development Bank, Research Department.
    5. Eduardo A. Cavallo & Christian Daude, 2008. "Public Investment in Developing Countries: A Blessing or a Curse?," IDB Publications (Working Papers) 1631, Inter-American Development Bank.
    6. Eduardo Lora, 2007. "La vulnerabilidad fiscal del gasto social: ¿Es Diferente América Latina?," Research Department Publications 4506, Inter-American Development Bank, Research Department.
    7. repec:agr:journl:v:4(605):y:2015:i:4(605):p:189-198 is not listed on IDEAS
    8. Anis Chowdhury, 2012. "Structural Adjustment and Crises –Which Way Now?," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 4(1), pages 85-118, April.
    9. Rozas, Patricio, 2010. "Latin America: problems and challenges of infrastructure financing," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. repec:idb:idbbks:7677 is not listed on IDEAS
    11. Eduardo Lora, 2009. "La Vulnerabilidad Fiscal del Gasto Social: ¿Es diferente América Latina?," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 24(1), pages 3-20, Junio.
    12. Guillermo A. Calvo, 2006. "Monetary Policy Challenges in Emerging Markets: Sudden Stop, Liability Dollarization, and Lender of Last Resort," NBER Working Papers 12788, National Bureau of Economic Research, Inc.
    13. Walid BENAYED & Foued Badr GABSI & Samia OMRANE BELGUITH, 2015. "Threshold Effect of Public Debt on Domestic Investment: Evidence from Selected African Countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, pages 189-198.

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