The Investment-Financing-Growth Nexus: The Case of Liberia

 
Author/Editor: Will Clark ; Manuel Rosales
 
Publication Date: November 22, 2013
 
Electronic Access: Free Full text (PDF file size is 998KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: Liberia is facing large infrastructure gaps and developmental needs that constrain the country’s growth potential. The government has set an ambitious agenda to transform the economy and to reach middle-income country status by 2030 by scaling up investment in infrastructure and human capital. Fiscal space remains constrained by rigidities in current spending and the government will need to resort to borrowing to close some of the gaps. This paper presents an estimate of the nexus between public investment, financing, and growth in Liberia using an inter-temporal macroeconomic model. The model has been calibrated as much as possible to Liberian economic data and assumes that public investment has a high economic and social rate of return and is highly complementary toward private sector investment. The objective of the paper is to contribute to the debate on how fast public investment should be scaled up to address the country’s developmental needs. The paper also highlights the trade-offs and potential risks associated with different financing options and the required changes in fiscal policy to ensure macroeconomic stability.
 
Series: Working Paper No. 13/237
Subject(s): Public investment | Liberia | Infrastructure | Economic growth | Debt sustainability | Fiscal policy | Economic models

 
English
Publication Date: November 22, 2013
ISBN/ISSN: 9781475534931/2227-8885 Format: Paper
Stock No: WPIEA2013237 Pages: 23
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org