The authors reconsider the macroeconomic implications of public investment efficiency, defined as the ratio between the actual increment to public capital and the amount spent. They show that, in a simple and standard model, increases in public investment spending in inefficient countries do not have a lower impact on growth than in efficient countries, a result confirmed in a simple cross-country regression.
This work is part of the ‘Macroeconomics in Low-income countries’ programme
Andrew Berg, Edward F Buffie, Catherine A Pattillo, Rafael Portillo, Andrea Presbitero, Luis-Felipe Zanna (2016) Some Misconceptions about Public Investment Efficiency and Growth Working Paper No. 15/272
Some Misconceptions about Public Investment Efficiency and Growth
Published 23 December 2015