The Macroeconomic Effects of Public Investment: Evidence from Advanced Economies

@article{Abiad2015TheME,
  title={The Macroeconomic Effects of Public Investment: Evidence from Advanced Economies},
  author={A. Abiad and Davide Furceri and P. Topalova},
  journal={Political Economy: Government Expenditures \& Related Policies eJournal},
  year={2015}
}
This paper provides new evidence of the macroeconomic effects of public investment in advanced economies. Using public investment forecast errors to identify the causal effect of government investment as well as model simulations, the paper finds that increased public investment raises output, both in the short term and in the long term, crowds in private investment, and reduces unemployment. Several factors shape the macroeconomic effects of public investment. When there is economic slack and… Expand
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