## wp1710

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---

### Introduction and motivation
- Weak economic performance following the global economic crisis of 2008 renewed interest in public investment as a source of both cyclical stimulus and longer-term boost to productivity and growth.
- Factors supporting increased public investment include currently low long-term borrowing costs, weak global demand, and substantial infrastructure deficiencies.
- IMF (2016) finds that public investment has the largest effect on GDP among different fiscal stimulus tools.
- Caution: higher investment does not automatically lead to higher growth if investment returns are poor due to inefficiencies and higher debt associated with investment booms.

### Objective and model approach
- Purpose: Contribute to the debate on the growth and debt impact of public investment for three fast-growing Southeast Asian economies: Cambodia, Sri Lanka, and Vietnam.
- Model: Dynamic small open economy model extending Buffie et al. (2012) to include:
  - Alternative financing instruments: domestic debt, concessional external debt, external commercial debt.
  - Inefficient tax revenue collection represented by revenue loss wedges θ.
  - Time-varying inefficiencies in public investment and "learning by doing" improving investment efficiency s over time.
  - Two household types (savers and liquidity-constrained), two productive sectors (tradable and nontradable), and a detailed government fiscal rule and financing mechanics.

### Key calibration and initial conditions (selected exact values from Table 1)
- Public investment to GDP (īz,o): Cambodia 8.1, Sri Lanka 4.8, Vietnam 7.4
- Public domestic debt to GDP (b̄o): Cambodia 0.4, Sri Lanka 43.7, Vietnam 23.7
- Public concessional debt to GDP (d̄o): Cambodia 33.4, Sri Lanka 21.0, Vietnam 2.5
- Public external (commercial) debt to GDP (d̄c,o): Cambodia 0.0, Sri Lanka 8.3, Vietnam 21.6
- Real interest rate on domestic debt (r̄o): 1.5 for all three countries
- Real interest rate on public external debt (rdc,o): Cambodia 0.2, Sri Lanka 0.6, Vietnam 0.6
- Grants to GDP (Ḡo): Cambodia 3.0, Sri Lanka 0.1, Vietnam 3.5
- Remittances to GDP (R̄o): Cambodia 1.3, Sri Lanka 10.1, Vietnam 7.4
- Private external debt to GDP (b̄∗o): Cambodia 8.0, Sri Lanka 22.2, Vietnam 7.1
- Statutory tax rates (τ̄):
  - CIT τp,o = Cambodia 20.0, Sri Lanka 17.5, Vietnam 20.0
  - PIT τl,o = Cambodia 20.0, Sri Lanka 15.0, Vietnam 20.0
  - VAT τc,o = Cambodia 10.0, Sri Lanka 15.0, Vietnam 10.0
- Revenue loss (θ) (CIT, PIT, VAT):
  - Cambodia θp,o 90.0, θl,o 96.5, θc,o 46.0
  - Sri Lanka θp,o 81.0, θl,o 78.2, θc,o 74.6
  - Vietnam θp,o 62.7, θl,o 92.6, θc,o 67.0
- Public investment efficiency (s̄): Cambodia 32.1, Sri Lanka 85.2, Vietnam 70.4
- Return on public infrastructure investment (R̄o): Cambodia 34.0, Sri Lanka 27.0, Vietnam 22.0
- Output elasticities w.r.t. effective infrastructure (ψ): Cambodia 0.176, Sri Lanka 0.222, Vietnam 0.229
- Share of liquidity-constrained households: Cambodia 37.0, Sri Lanka 9.6, Vietnam 17.2 (poverty headcount proxies)
- Import shares (used for consumption CES): Cambodia 66.4, Sri Lanka 25.9, Vietnam 74.3

### Public investment, revenue collection and efficiency context
- Historical public investment levels last 25 years:
  - Sri Lanka: rose from around 2 percent of GDP (1990-2004) to around 4-5 percent since then; EDA average about 6-7 percent.
  - Cambodia and Vietnam: reached about the same level as EDA at about 8 percent.
- Public capital stock:
  - Vietnam ~60 percent of GDP and increasing.
  - Cambodia marginally lower than Vietnam and increasing recently after a decline (1990-2006).
  - Sri Lanka lowest among the three, about one-half of the EDA average.
- PIMA and PIE-X diagnostics:
  - Cambodia scores consistently below EDA average across planning, allocating, and implementing.
  - Vietnam shows deficiencies in project appraisal and transparency.
  - Sri Lanka scores highest overall and generally above EDA average.
  - PIE-X indicates substantial scope to improve public investment efficiency especially in Cambodia; Sri Lanka close to the efficiency frontier; Vietnam between these countries and below EDA average.
- Tax revenue performance:
  - Government revenues (% of GDP): Sri Lanka declined from ~20 percent to below 15 percent; Cambodia rose from <10 percent to >15 percent and surpassed Sri Lanka in 2007; Vietnam in the range 20-25 percent of GDP (though fallen recently).
  - Effective tax rates reported:
    - Effective CIT: Cambodia 2.0%, Sri Lanka 3.3%, Vietnam 7.5%
    - Effective PIT: Cambodia 0.7%, Sri Lanka 3.3%, Vietnam 1.5%
    - Effective VAT: Cambodia 5.4%, Sri Lanka 3.8%, Vietnam 9.3%

### Model features relevant for policy experiments
- Fiscal financing instruments:
  - Domestic bonds, concessional external debt (fixed r d = 0.00), external commercial debt with risk premium linked to public debt deviations.
- Government budget identity and fiscal gap:
  - Gap t = Exp t − Rev t determines needs for ∆b t, ∆d c,t, and tax adjustments.
- Tax adjustment rules:
  - Tax targets respond to fiscal gap with parameters λτl, λτp allocating burden across PIT and CIT.
  - Speed parameters λ1,i = 25% toward tax targets and λ2,i = 2% response to debt deviations.
  - Ceilings limit statutory rates.
- Public investment inefficiencies and absorptive capacity:
  - Effective public capital z e,t = s t z t where s t ∈ [0,1].
  - Public investment efficiency responds to investment pace through a learning-by-doing specification.
  - Revenue collection efficiency θ i t also improves with investment.

### Policy scenarios analyzed (structure and assumptions)
- Common experimental setup: Scale up public investment by a cumulative increase equal to 20 percent of initial GDP under alternative timing and financing strategies.
- Two investment timing profiles:
  - Gradual profile: implement program in 8 years (increase public investment-to-GDP ratio by 2.5 p.p. annually); investment efficiency gain parameter %s set at 0.5.
  - Front-loaded profile: implement program in 4 years with a bigger initial surge (peaks in the first year with an additional 5.6 p.p. and less in years 2–4); %s set at 0.
- Financing modalities examined:
  - Tax-based financing: taxes increased with allocation 1/2 through VAT and 1/4 through CIT and PIT increases (λτl = λτp = 25%), no additional borrowing.
  - Borrowing-based financing: program financed entirely with domestic or external commercial borrowing, no tax increases.
  - Mixed financing variants and scenarios allowing improvement in revenue collection efficiency in conjunction with borrowing and fiscal adjustment.

### Main findings — timing and learning-by-doing
- Gradual strategy preferred to front-loaded strategy because:
  - Learning-by-doing effects in the gradual strategy raise public investment efficiency over time.
  - While front-loaded programs raise real GDP initially, these higher growth rates do not last; after 5-6 years, real GDP under the gradual program surpasses the real GDP level under the front-loaded scenario.
- Representative medium-term (15 years) real GDP changes under tax-based financing (1/2 VAT, 1/4 CIT, 1/4 PIT), gradual vs front-loaded:
  - Cambodia: 1.9 percent (gradual scenario)
  - Sri Lanka: 4.4 percent (gradual scenario)
  - Vietnam: 3.0 percent (gradual scenario), which is 0.9, 1.8, and 1.4 p.p. higher compared to the front-loaded scenario (context indicates relative gains across countries and scenarios).

### Financing composition and macro trade-offs
- Front-loaded public investment requires higher tax-rate increases: by 4 p.p. for the VAT, and by about 3 p.p. for the CIT and PIT.
- Borrowing-based financing:
  - Domestic borrowing leads to higher debt-to-GDP ratios and crowds out private investment; can sharply raise real interest rates on domestic debt.
  - External borrowing generally produces lower public debt-to-GDP ratios but leads to real exchange rate appreciation that negatively impacts the traded goods sector and can slow real GDP growth.
  - Relying solely on external borrowing entails medium-term risks from potential increases in country risk premia.
- Mixed financing:
  - Combining higher indirect taxes (VAT) and borrowing (mostly external) could be preferable: similar GDP growth with lower debt levels and lower risk of debt distress.
  - For countries with already high debt levels, even combined strategies can entail too high a risk to debt sustainability.

### Quantitative outcomes from alternative financing (15-year impacts — selected exact entries from Table 2)
- Definitions: "Avg. growth" = 15y average additional p.p. of yearly real GDP growth; "∆ (Debt/GDP)" = difference between debt-to-GDP ratio in t=15 and initial value (additional p.p.). "NF" = not feasible.
- Cambodia — Gradual:
  - Taxes only: Avg. growth 0.25; ∆ (Debt/GDP) -0.62
  - Dom. debt: Avg. growth 0.24; ∆ (Debt/GDP) 23.65
  - Ext. debt: Avg. growth 0.31; ∆ (Debt/GDP) 17.41
  - VAT/Debt: Avg. growth 0.26; ∆ (Debt/GDP) 15.32
  - Taxes/Debt: Avg. growth 0.21; ∆ (Debt/GDP) 17.56
- Cambodia — Aggressive:
  - Taxes only: Avg. growth 0.14; ∆ (Debt/GDP) -0.34
  - Dom. debt: Avg. growth 0.13; ∆ (Debt/GDP) 26.30
  - Ext. debt: Avg. growth 0.22; ∆ (Debt/GDP) 18.25
  - VAT/Debt: Avg. growth 0.12; ∆ (Debt/GDP) 21.78
  - Taxes/Debt: Avg. growth 0.09; ∆ (Debt/GDP) 21.95
- Sri Lanka — Gradual:
  - Taxes only: Avg. growth 0.57; ∆ (Debt/GDP) -3.02
  - Dom. debt: Avg. growth 0.56; ∆ (Debt/GDP) 20.26
  - Ext. debt: Avg. growth 0.65; ∆ (Debt/GDP) 12.70
  - CIT/Debt: Avg. growth 0.56; ∆ (Debt/GDP) 13.47
  - PIT/Debt: Avg. growth 0.53; ∆ (Debt/GDP) 13.71
  - VAT/Debt: Avg. growth 0.60; ∆ (Debt/GDP) 14.42
  - Taxes/Debt: Avg. growth 0.56; ∆ (Debt/GDP) 13.42
- Sri Lanka — Aggressive:
  - Taxes only: Avg. growth 0.36; ∆ (Debt/GDP) -1.89
  - Dom. debt: Avg. growth 0.35; ∆ (Debt/GDP) 25.32
  - Ext. debt: Avg. growth 0.44; ∆ (Debt/GDP) 14.77
  - VAT/Debt: Avg. growth 0.37; ∆ (Debt/GDP) 19.70
  - Taxes/Debt: Avg. growth 0.33; ∆ (Debt/GDP) 18.15
- Vietnam — Gradual:
  - Taxes only: Avg. growth 0.39; ∆ (Debt/GDP) -1.34
  - Dom. debt: Avg. growth 0.36; ∆ (Debt/GDP) 18.57
  - Ext. debt: Avg. growth 0.45; ∆ (Debt/GDP) 11.04
  - CIT/Debt: Avg. growth 0.42; ∆ (Debt/GDP) 6.68
  - PIT/Debt: Avg. growth 0.38; ∆ (Debt/GDP) 8.12
  - VAT/Debt: Avg. growth 0.42; ∆ (Debt/GDP) 5.32
  - Taxes/Debt: Avg. growth 0.40; ∆ (Debt/GDP) 5.95
- Vietnam — Aggressive:
  - Taxes only: Avg. growth 0.23; ∆ (Debt/GDP) -0.79
  - Dom. debt: Avg. growth 0.21; ∆ (Debt/GDP) 23.29
  - Ext. debt: Avg. growth 0.30; ∆ (Debt/GDP) 12.75
  - CIT/Debt: Avg. growth 0.25; ∆ (Debt/GDP) 15.70
  - PIT/Debt: Avg. growth 0.26; ∆ (Debt/GDP) 16.07
  - VAT/Debt: Avg. growth 0.27; ∆ (Debt/GDP) 12.94
  - Taxes/Debt: Avg. growth 0.24; ∆ (Debt/GDP) 10.64

### Timing, crowding effects, and private-sector responses
- Initial years: private investment growth is initially negative in both tradable and nontradable sectors due to crowding out from public investment.
- Later years: private investment picks up and eventually surpasses real GDP growth (crowding in) as public capital raises the marginal product of private capital.
- Predominantly domestic debt amplifies negative effects on private investment by raising real interest rates on domestic bonds.
- Private consumption: with constrained tax increases in the first four years (when borrowing is used), private consumption is less impacted than under immediate tax-financing scenarios.

### Improving tax revenue collection — setup and impacts
- Assumption for scenarios with improved collection: revenue collection efficiency gain parameter (%)τ is set at 0.5 across all taxes and equals %s (speed of public investment efficiency improvement).
- Table 3 (effective tax rates at end of investment program; gradual profile, no additional borrowing) — selected exact entries (values in parentheses refer to the scenario discussed earlier):
  - Effective CIT rate (τp8): Cambodia 3.1 (2.1); Sri Lanka 4.8 (3.6); Vietnam 8.6 (7.9)
  - CIT revenue loss (θp8): Cambodia 85.5 (90.0); Sri Lanka 74.5 (81.0); Vietnam 59.3 (62.7)
  - Effective PIT rate (τl8): Cambodia 1.8 (0.8); Sri Lanka 4.5 (3.5); Vietnam 2.6 (1.6)
  - PIT revenue loss (θl8): Cambodia 91.6 (96.5); Sri Lanka 71.9 (78.2); Vietnam 87.5 (92.6)
  - Effective VAT rate (τc8): Cambodia 6.7 (6.4); Sri Lanka 5.2 (4.2); Vietnam 10.7 (10.7)
  - VAT revenue loss (θc8): Cambodia 43.7 (46.0); Sri Lanka 68.6 (74.6); Vietnam 6.6 (7.0)
- Effects of improving tax collection:
  - Can lead to an additional 0.3 to 0.7 p.p. annually in real GDP growth (major gains for Sri Lanka and Cambodia).
  - Reduces need for borrowing and slows statutory tax adjustments.
  - Private consumption surpasses the scenario without gains only after about fifteen years.
  - Provides sizable boost to private investment (largest in Sri Lanka, then Vietnam, then Cambodia).
- Debt-to-GDP benefits after 15 years (Table 4; "All Taxes and Debt" scenario with time-varying revenue gains):
  - Cambodia: Avg. GDP growth 0.33; ∆ (Debt/GDP) 6.73
  - Sri Lanka: Avg. GDP growth 0.73; ∆ (Debt/GDP) -3.59
  - Vietnam: Avg. GDP growth 0.46; ∆ (Debt/GDP) 0.52
- Relative to gradual scaling up without tax-efficiency improvements, debt-to-GDP ratios can be:
  - 17 p.p. lower in Sri Lanka,
  - 11 p.p. lower in Cambodia,
  - 5 p.p. lower in Vietnam,
  15 years after the start of the program.

### Policy implications and recommendations
- Favor gradual scaling-up of public investment over front-loaded programs to allow learning by doing and improvements in public investment efficiency.
- Do not rely exclusively on external commercial borrowing because of real appreciation and rising risk-premium risks; prefer mixtures that include revenue mobilization.
- Prefer combining tax increases with borrowing over relying solely on external borrowing because:
  - External borrowing yields higher growth but introduces volatility and real exchange rate appreciation costs and is vulnerable to changes in country risk premia.
  - Combining borrowing (with a tilt toward external borrowing where feasible) and VAT increases (the most efficiently collected tax) produces higher growth and lower debt levels.
- Prioritize improving revenue collection efficiency (tax administration, compliance, broadening bases, reducing exemptions) to:
  - Increase effective revenue without raising statutory rates,
  - Reduce distortionary impacts of taxation,
  - Lower the need for borrowing and improve debt sustainability.
- For countries with high initial public debt but large infrastructure needs, mitigate the tension between investment and debt sustainability by improving revenue collection and adopting mixed financing strategies while accounting for domestic market capacity and risk premia.

### Concluding synthesis
- A sizeable medium-term investment scaling up program, combined with reforms that enhance the efficiency of public investment and tax revenue collection, can lead to better macroeconomic outcomes than a front-loaded "big push."
- Improving both public investment efficiency and tax collection efficiency are key channels to reconcile infrastructure needs with debt sustainability and intergenerational burden sharing across Cambodia, Sri Lanka, and Vietnam.

*Source: IMF staff paper (wp1710) — content as provided in the supplied excerpt.*

### References29

### References29

### Key points from the Introduction
- Weak economic performance following the global economic crisis of 2008 renewed interest in public investment as a source of both cyclical stimulus and longer-term boost to productivity and growth.
- There has been skepticism about the public-investment-driven growth model; emphasis was placed on developing private markets and correcting incentives. More recently, a more nuanced view has emerged, and public investment—in infrastructure, in particular—has improved reputation.
- Factors supporting increased public investment include currently low long-term borrowing costs, weak global demand, and substantial infrastructure deficiencies across countries (Abiad et al.  (2014)).
- Proponents argue that increased public investment yields higher productivity gains crucial for robust long-term growth (Spence, 2015), consistent with Global Integrated Monetary and Fiscal (GIMF) model simulations (IMF, 2016).
- IMF (2016) finds that public investment has the largest effect on GDP among different fiscal stimulus tools.
- Rapidly growing countries such as Ethiopia and Bolivia are cited as examples of beneficial impacts of sustained increases in public investment on growth (Rodrik, 2016).
- Cautionary views note that higher investment does not automatically lead to higher growth: poor investment returns due to inefficiencies and higher debt associated with investment booms can result in weaker growth (Warner, 2014).
- Empirical evidence on the impact of public investment on growth remains mixed: individual infrastructure projects may generate high returns, but their aggregate impact on GDP growth is more uncertain.
- Calder ́on, Easterly, and Serv ́en (2003) argue that reductions in infrastructure spending in Latin America in the 1990s significantly reduced long-term growth prospects (e.g., by about 3 percentage points (or p.p.)  a year in Brazil, and between ...).

### Figures and tables referenced in this content unit
- Figures
  - Figure 1: Strength of public investment management and efficiency
  - Figure 2: Efficiency of revenue collection
  - Figure 3: Gradual versus front-loaded investment scaling up
  - Figure 4: Resorting to debt is an alternative but sustainability risks exist
  - Figure 5: Debt financing with tax adjustments is a sensible option
  - Figure 6: Improving revenue collection reduces debt distress
  - Figure A.1: Public investment (2011 PPP$-adjusted, % of GDP)
  - Figure A.2: Private investment (2011 PPP$-adjusted, % of GDP)
  - Figure A.3: Public capital stock (2011 PPP$-adjusted, % of GDP)
  - Figure A.4: Public investment performance indicators
  - Figure A.5: Measures of infrastructure access
  - Figure A.6: General government revenues (% of GDP)
  - Figure A.7: Public debt (% of GDP)
- Tables
  - Table 1: Selected initial values (%)
  - Table 2: Impact on growth and public debt after 15 years
  - Table 3: Effective tax rates at the end of the investment program (%)
  - Table 4: Revenue collection and impact on growth and public debt after 15 years
  - Table A.1: Other calibrated parameters

### Analytical themes and policy implications highlighted
- Public investment can be an effective fiscal stimulus and a source of long-term productivity gains, but outcomes depend critically on investment efficiency and public investment management.
- Low borrowing costs and unmet infrastructure needs make the case for scaling up public investment in many countries, but scaling up raises fiscal sustainability and debt-risk considerations.
- Complementary reforms to improve investment returns and public investment management are essential to ensure that increased public spending translates into growth.
- Improving revenue collection and careful choices between front-loaded versus gradual scaling up, and between debt financing and tax adjustments, are central policy trade-offs referenced by the figures and tables listed.

*Source: wp1710 - References29*

### 0.5 and 2 p.p.  a year in Chile, Mexico, and Peru) and widened the per capita output gap with East

### wp1710 - 0.5 and 2 p.p.  a year in Chile, Mexico, and Peru) and widened the per capita output gap with East

### Objective and approach
- Purpose: Contribute to the debate on the growth and debt impact of public investment for three fast-growing Southeast Asian economies: Cambodia, Sri Lanka, and Vietnam.
- Model: Dynamic small open economy model extending Buffie et al. (2012) to include:
  - Alternative financing instruments (domestic debt, concessional external debt, external commercial debt).
  - Inefficient tax revenue collection (revenue loss wedges θ).
  - Time-varying inefficiencies in public investment and "learning by doing" improving investment efficiency s over time.
  - Two household types (savers and liquidity-constrained), two productive sectors (tradable and nontradable), and detailed government fiscal rule and financing mechanics.

### Key calibration and initial conditions (selected exact values from Table 1)
- Public investment to GDP (īz,o): Cambodia 8.1, Sri Lanka 4.8, Vietnam 7.4
- Public domestic debt to GDP (b̄o): Cambodia 0.4, Sri Lanka 43.7, Vietnam 23.7
- Public concessional debt to GDP (d̄o): Cambodia 33.4, Sri Lanka 21.0, Vietnam 2.5
- Public external (commercial) debt to GDP (d̄c,o): Cambodia 0.0, Sri Lanka 8.3, Vietnam 21.6
- Real interest rate on domestic debt (r̄o): 1.5 for all three countries
- Real interest rate on public external debt (rdc,o): Cambodia 0.2, Sri Lanka 0.6, Vietnam 0.6
- Grants to GDP (Ḡo): Cambodia 3.0, Sri Lanka 0.1, Vietnam 3.5
- Remittances to GDP (R̄o): Cambodia 1.3, Sri Lanka 10.1, Vietnam 7.4
- Private external debt to GDP (b̄∗o): Cambodia 8.0, Sri Lanka 22.2, Vietnam 7.1
- Statutory tax rates (τ̄): CIT τp,o = Cambodia 20.0, Sri Lanka 17.5, Vietnam 20.0; PIT τl,o = Cambodia 20.0, Sri Lanka 15.0, Vietnam 20.0; VAT τc,o = Cambodia 10.0, Sri Lanka 15.0, Vietnam 10.0
- Revenue loss (θ) (CIT, PIT, VAT): Cambodia θp,o 90.0, θl,o 96.5, θc,o 46.0; Sri Lanka θp,o 81.0, θl,o 78.2, θc,o 74.6; Vietnam θp,o 62.7, θl,o 92.6, θc,o 67.0
- Public investment efficiency (s̄): Cambodia 32.1, Sri Lanka 85.2, Vietnam 70.4
- Return on public infrastructure investment (R̄o): Cambodia 34.0, Sri Lanka 27.0, Vietnam 22.0
- Output elasticities w.r.t. effective infrastructure (ψ): Cambodia 0.176, Sri Lanka 0.222, Vietnam 0.229
- Share of liquidity-constrained households: Cambodia 37.0, Sri Lanka 9.6, Vietnam 17.2 (poverty headcount proxies)
- Import shares (used for consumption CES): Cambodia 66.4, Sri Lanka 25.9, Vietnam 74.3

### Public investment, revenue collection and efficiency context
- Historical patterns:
  - Public investment levels last 25 years: Sri Lanka rose from around 2 percent of GDP (1990-2004) to around 4-5 percent since then; EDA average about 6-7 percent. Cambodia and Vietnam reached about the same level as EDA at about 8 percent.
  - Public capital stock: Vietnam ~60 percent of GDP and increasing; Cambodia marginally lower than Vietnam and increasing recently after a decline (1990-2006); Sri Lanka lowest among the three, about one-half of the EDA average.
- Public Investment Management Assessment (PIMA) and PIE-X:
  - Cambodia scores consistently below EDA average across planning, allocating, and implementing; needs improvement in monitoring public assets, fiscal rules, and multiyear budgeting.
  - Vietnam shows deficiencies in project appraisal and transparency (IMF initial analysis).
  - Sri Lanka scores highest overall and generally above EDA average.
  - PIE-X indicates substantial scope to improve public investment efficiency especially in Cambodia; Sri Lanka close to the efficiency frontier; Vietnam between these countries and below EDA average.
- Tax revenue performance and collection efficiency:
  - Government revenues (percent of GDP): Sri Lanka declined from ~20 percent to below 15 percent; Cambodia rose from <10 percent to >15 percent and surpassed Sri Lanka in 2007; Vietnam in the range 20-25 percent of GDP (though fallen recently).
  - Tax productivity: Vietnam highest for CIT, PIT, and VAT (VAT even exceeds Asian average); Sri Lanka lowest; Cambodia intermediate. Effective tax rates reported: effective CIT Cambodia 2.0%, Sri Lanka 3.3%, Vietnam 7.5%; effective PIT Cambodia 0.7%, Sri Lanka 3.3%, Vietnam 1.5%; effective VAT Cambodia 5.4%, Sri Lanka 3.8%, Vietnam 9.3%.

### Model features relevant for policy experiments
- Fiscal financing instruments: domestic bonds, concessional external debt (fixed r d = 0.00), external commercial debt with risk premium linked to public debt deviations.
- Government budget identity and fiscal gap (Gap t = Exp t − Rev t) determines needs for ∆b t, ∆d c,t, and tax adjustments.
- Tax adjustment rules: tax targets respond to fiscal gap with parameters λτl, λτp allocating burden across PIT and CIT; speed parameters λ1,i = 25% toward tax targets and λ2,i = 2% response to debt deviations; ceilings limit statutory rates.
- Public investment inefficiencies and absorptive capacity:
  - Effective public capital z e,t = s t z t where s t ∈ [0,1]; investment inefficiencies translate into less than one-to-one effective capital accumulation.
  - Public investment efficiency responds to investment pace: s s t = max{s t−1, s t−1 (∆z t) % s } capturing learning-by-doing when investing gradually.
  - Revenue collection efficiency θ i t also improves with investment (θ i t = min{θ i t−1, θ i t−1 (∆z t) −% τ }).

### Policy scenarios analyzed (structure and assumptions)
- Common experimental setup: Scale up public investment by a cumulative increase equal to 20 percent of initial GDP under alternative timing and financing strategies.
- Two investment timing profiles:
  - Gradual profile: implement program in 8 years (increase public investment-to-GDP ratio by 2.5 p.p. annually); investment efficiency gain parameter % s set at 0.5 (efficiency increases with additional investment).
  - Front-loaded profile: implement program in 4 years with a bigger initial surge (peaks in the first year with an additional 5.6 p.p. and less in years 2–4); % s set at 0 (efficiency fixed).
- Financing modalities examined:
  - Tax-based financing: taxes increased with allocation 1/2 through VAT and 1/4 through CIT and PIT increases (λτl = λτp = 25%), no additional borrowing.
  - Borrowing-based financing: program financed entirely with domestic or external commercial borrowing, no tax increases.
  - Mixed financing variants, and scenarios allowing improvement in revenue collection efficiency in conjunction with borrowing and fiscal adjustment.

### Main findings from experiments (summarized)
- Timing: A more gradual investment strategy is preferable to a front-loaded strategy.
  - Regardless of financing composition, the gradual strategy delivers higher growth for a given scaling-up of investment due to positive "learning by doing" effects on public capital accumulation efficiency.
- Financing composition:
  - Model simulations show external financing produces the largest increase in real GDP over the long term.
  - However, relying solely on external borrowing entails medium-term risks: large real appreciations damaging the tradable sector and the potential for far greater external borrowing costs from increasing country risk premia.
  - Combining higher indirect taxes (VAT) and borrowing (mostly external) could be preferable: similar GDP growth with lower debt levels and lower risk of debt distress.
  - For countries with already high debt levels, this combined strategy could still entail too high a risk to debt sustainability.
- Revenue collection efficiency:
  - Improving the efficiency of revenue collection is crucial: higher tax collection efficiency allows financing the same investment with much lower debt levels and lower statutory tax rates, reducing distortionary effects on consumption and investment, thereby boosting growth and reducing debt sustainability risks.

### Representative quantitative outcome (tax-based financing, gradual vs front-loaded)
- Under tax-based financing of the new investment (allocation: 1/2 VAT, 1/4 CIT, 1/4 PIT) and comparing gradual vs front-loaded profiles:
  - Real GDP over the medium term (in 15 years) relative to its steady state increases by:
    - 1.9 percent in Cambodia
    - 4.4 percent in Sri Lanka
    - (document truncates before reporting the Vietnam value)

### Policy implications emphasized
- Favor gradual scaling-up of public investment to allow learning and efficiency gains in public capital accumulation.
- Do not rely exclusively on external commercial borrowing because of real appreciation and rising risk-premium risks; prefer mixtures that include revenue mobilization.
- Prioritize improving revenue collection efficiency (reducing θ wedges) as a low-debt, high-growth lever: it allows financing investment with lower statutory tax increases and lower debt accumulation.
- Consider increasing indirect taxes (VAT) as part of a balanced financing strategy combined with borrowing, subject to country-specific debt levels and sustainability constraints.

*Source: IMF staff paper (wp1710) — content as provided in the supplied excerpt.*

### 3.0 percent in Vietnam (which is 0.9, 1.8, and 1.4 p.p.  higher compared to the front-loaded scenario).

### wp1710 - 3.0 percent in Vietnam (which is 0.9, 1.8, and 1.4 p.p.  higher compared to the front-loaded scenario)

### Key comparative finding: gradual versus front-loaded investment scaling up
- 3.0 percent in Vietnam (which is 0.9, 1.8, and 1.4 p.p. higher compared to the front-loaded scenario).
- While under the front-loaded program real GDP growth is initially higher than under the gradual program, these higher growth rates do not last and sustained gains in investment efficiency under the gradual program lead to a steady increase in real GDP growth.
- After 5-6 years, real GDP under the gradual program surpasses the real GDP level under the front-loaded scenario.

### Figure 3 (Gradual versus front-loaded investment scaling up): variables and observed ranges
- Countries shown: Cambodia, SriLanka, Vietnam.
- Public investment (% of GDP): axis labels include 4, 6, 8, 10, 12, 14.
- Public effective capital (%∆from SS): axis labels include 0, 5, 10, 15, 20, 25, 30.
- Public investment efficiency (%): axis labels include 30, 40, 50, 60, 70, 80, 90.
- Real GDP (%∆from SS): axis labels include 0, 1, 2, 3, 4, 5.
- Time horizon: years 2015 2020 2025 2030 2035.
- Scenarios depicted: Gradual and Front-loaded.

### Fiscal financing note
- It is worth mentioning that to finance the gradual scaling up, the VAT rate will have to increase on average by 1.9 p.p. in the three countries, while the CIT and PIT rates will have to increase by

*Source: wp1710 - 3.0 percent in Vietnam (which is 0.9, 1.8, and 1.4 p.p.  higher compared to the front-loaded scenario).*

### 1.3 p.p.  during the investment program.  The front-loaded public investment program would require

### wp1710 - 1.3 p.p.  during the investment program.  The front-loaded public investment program would require

### A. Financing choices and macroeconomic trade-offs
- Front-loaded public investment requires notably higher tax-rate increases: by 4 p.p. for the VAT, and by about 3 p.p. for the CIT and PIT.
- Financing the investment scaling up with borrowing (domestic or external) leads to significant increases in public debt even when GDP rises.
- Domestic borrowing leads to higher debt-to-GDP ratios relative to external borrowing and crowds out private investment by competing for finite domestic resources; this slows real GDP growth and can sharply raise real interest rates on domestic debt in aggressive scenarios.
- Under domestic-borrowing front-loaded strategies, public debt paths can be extreme:
  - Cambodia: public debt-to-GDP ratio doubles over 30 years.
  - Sri Lanka and Vietnam: under domestic borrowing-financed gradual investment, public debt eventually peaks and declines, but remains above 90 percent of GDP in Sri Lanka and above 60 percent of GDP in Vietnam for an extended period, raising debt sustainability concerns.
- External borrowing generally produces lower public debt-to-GDP ratios (reflecting lower real interest rates and non-crowding-out effects) but:
  - Assumes a constant country risk premium (ηg = 1).
  - Leads to real exchange rate appreciation that negatively impacts the traded goods sector and can slow real GDP growth; appreciation effects are stronger with front-loaded plans.

### B. Combining borrowing and tax increases — scenario assumptions and country mixes
- Medium-term borrowing split assumptions:
  - Cambodia: υ = 75% domestic borrowing.
  - Vietnam: υ = 25% domestic borrowing (i.e., more external).
  - Sri Lanka: υ = 50% (indifferent between domestic and external).
- Assumption on timing: governments postpone tax increases during the first four years of the investment scaling up and rely entirely on borrowing in that period.
- General findings across financing mixes (gradual scaling up preferred to front-loaded):
  - Highest average medium-term real GDP growth increases: Sri Lanka, then Vietnam, then Cambodia.
    - Sri Lanka: average annual real GDP growth increases by 0.5-0.65 p.p.
    - Vietnam: about 0.35-0.45 p.p.
    - Cambodia: about 0.25-0.31 p.p.
  - Scaling up fully financed by external borrowing generally produces the highest increase in real GDP and level, but with greater growth volatility (especially for Cambodia, which may initially see a real GDP decline before recovery).
  - External borrowing gains can be offset by real exchange rate appreciation and possible increases in country risk premia, which could raise borrowing costs—particularly worrisome for Cambodia.
  - Domestic borrowing-only financing produces the largest increases in public debt-to-GDP ratios (about 20 p.p. in Sri Lanka and Vietnam before peaking and declining; Cambodia’s ratio continues to increase).
  - Tax-only financing leads to a slow decline in debt because of increasing GDP.

### Key quantitative outcomes from alternative financing (Table 2 highlights; 15-year impacts)
- Note: "Avg. growth" = 15y average additional p.p. of yearly real GDP growth; "∆ (Debt/GDP)" = difference between debt-to-GDP ratio in t=15 and initial value (additional p.p.). "NF" = not feasible (explosive debt path).
- Cambodia — Gradual:
  - Taxes only: Avg. growth 0.25; ∆ (Debt/GDP) -0.62
  - Dom. debt: Avg. growth 0.24; ∆ (Debt/GDP) 23.65
  - Ext. debt: Avg. growth 0.31; ∆ (Debt/GDP) 17.41
  - VAT/Debt: Avg. growth 0.26; ∆ (Debt/GDP) 15.32
  - Taxes/Debt: Avg. growth 0.21; ∆ (Debt/GDP) 17.56
- Cambodia — Aggressive:
  - Taxes only: Avg. growth 0.14; ∆ (Debt/GDP) -0.34
  - Dom. debt: Avg. growth 0.13; ∆ (Debt/GDP) 26.30
  - Ext. debt: Avg. growth 0.22; ∆ (Debt/GDP) 18.25
  - VAT/Debt: Avg. growth 0.12; ∆ (Debt/GDP) 21.78
  - Taxes/Debt: Avg. growth 0.09; ∆ (Debt/GDP) 21.95
- Sri Lanka — Gradual:
  - Taxes only: Avg. growth 0.57; ∆ (Debt/GDP) -3.02
  - Dom. debt: Avg. growth 0.56; ∆ (Debt/GDP) 20.26
  - Ext. debt: Avg. growth 0.65; ∆ (Debt/GDP) 12.70
  - CIT/Debt: Avg. growth 0.56; ∆ (Debt/GDP) 13.47
  - PIT/Debt: Avg. growth 0.53; ∆ (Debt/GDP) 13.71
  - VAT/Debt: Avg. growth 0.60; ∆ (Debt/GDP) 14.42
  - Taxes/Debt: Avg. growth 0.56; ∆ (Debt/GDP) 13.42
- Sri Lanka — Aggressive:
  - Taxes only: Avg. growth 0.36; ∆ (Debt/GDP) -1.89
  - Dom. debt: Avg. growth 0.35; ∆ (Debt/GDP) 25.32
  - Ext. debt: Avg. growth 0.44; ∆ (Debt/GDP) 14.77
  - VAT/Debt: Avg. growth 0.37; ∆ (Debt/GDP) 19.70
  - Taxes/Debt: Avg. growth 0.33; ∆ (Debt/GDP) 18.15
- Vietnam — Gradual:
  - Taxes only: Avg. growth 0.39; ∆ (Debt/GDP) -1.34
  - Dom. debt: Avg. growth 0.36; ∆ (Debt/GDP) 18.57
  - Ext. debt: Avg. growth 0.45; ∆ (Debt/GDP) 11.04
  - CIT/Debt: Avg. growth 0.42; ∆ (Debt/GDP) 6.68
  - PIT/Debt: Avg. growth 0.38; ∆ (Debt/GDP) 8.12
  - VAT/Debt: Avg. growth 0.42; ∆ (Debt/GDP) 5.32
  - Taxes/Debt: Avg. growth 0.40; ∆ (Debt/GDP) 5.95
- Vietnam — Aggressive:
  - Taxes only: Avg. growth 0.23; ∆ (Debt/GDP) -0.79
  - Dom. debt: Avg. growth 0.21; ∆ (Debt/GDP) 23.29
  - Ext. debt: Avg. growth 0.30; ∆ (Debt/GDP) 12.75
  - CIT/Debt: Avg. growth 0.25; ∆ (Debt/GDP) 15.70
  - PIT/Debt: Avg. growth 0.26; ∆ (Debt/GDP) 16.07
  - VAT/Debt: Avg. growth 0.27; ∆ (Debt/GDP) 12.94
  - Taxes/Debt: Avg. growth 0.24; ∆ (Debt/GDP) 10.64

- Important note: Limited ability to collect CIT and PIT revenues and their relatively low tax bases preclude effective use of these instruments—particularly under front-loaded programs. Cambodia cannot feasibly combine borrowing and CIT or PIT to finance scaling up in several scenarios (columns marked NF).

### C. Timing, crowding effects, and private-sector responses
- Initial years: private investment growth is initially negative in both tradable and nontradable sectors (significantly in the first year) due to crowding out from public investment.
- Later years: private investment picks up and eventually surpasses real GDP growth (crowding in) as public capital raises the marginal product of private capital.
- Predominantly domestic debt amplifies negative effects on private investment by raising real interest rates on domestic bonds.
- Private consumption impact mirrors real GDP; with constrained tax increases in the first four years (when borrowing is used), private consumption is less impacted than under immediate tax-financing scenarios.

### D. Improving tax revenue collection — setup and impacts
- Assumption: revenue collection efficiency gain parameter (%)τ is set at 0.5 across all taxes and equals %s (speed of public investment efficiency improvement).
- Improved tax collection narrows the gap between effective tax rates (tax collection divided by tax base) and statutory rates, allowing more revenue from the same statutory rates.
- Table 3 (effective tax rates at end of investment program; gradual profile, no additional borrowing):
  - Effective CIT rate (τp8): Cambodia 3.1 (2.1); Sri Lanka 4.8 (3.6); Vietnam 8.6 (7.9)
  - CIT revenue loss (θp8): Cambodia 85.5 (90.0); Sri Lanka 74.5 (81.0); Vietnam 59.3 (62.7)
  - Effective PIT rate (τl8): Cambodia 1.8 (0.8); Sri Lanka 4.5 (3.5); Vietnam 2.6 (1.6)
  - PIT revenue loss (θl8): Cambodia 91.6 (96.5); Sri Lanka 71.9 (78.2); Vietnam 87.5 (92.6)
  - Effective VAT rate (τc8): Cambodia 6.7 (6.4); Sri Lanka 5.2 (4.2); Vietnam 10.7 (10.7)
  - VAT revenue loss (θc8): Cambodia 43.7 (46.0); Sri Lanka 68.6 (74.6); Vietnam 6.6 (7.0)
  - Values in parentheses refer to the scenario discussed earlier (section A).
- Effects of improving tax collection:
  - Can lead to an additional 0.3 to 0.7 p.p. annually in real GDP growth (major gains for Sri Lanka and Cambodia where revenue losses are larger).
  - Reduces need for borrowing and slows statutory tax adjustments.
  - Effects on private consumption are modest initially; it takes about fifteen years for private consumption with efficiency gains to surpass the scenario without gains.
  - Provides sizable boost to private investment (largest in Sri Lanka, then Vietnam, then Cambodia).
- Debt-to-GDP benefits after 15 years (Table 4; "All Taxes and Debt" scenario with time-varying revenue gains):
  - Cambodia: Avg. GDP growth 0.33; ∆ (Debt/GDP) 6.73
  - Sri Lanka: Avg. GDP growth 0.73; ∆ (Debt/GDP) -3.59
  - Vietnam: Avg. GDP growth 0.46; ∆ (Debt/GDP) 0.52
- Relative to gradual scaling up without tax-efficiency improvements, debt-to-GDP ratios can be:
  - 17 p.p. lower in Sri Lanka,
  - 11 p.p. lower in Cambodia,
  - 5 p.p. lower in Vietnam,
  15 years after the start of the program.

### E. Policy implications and recommendations (derived from the analysis)
- Favor gradual scaling up of public investment over front-loaded programs to allow learning by doing and improvements in public investment efficiency.
- Prefer combining tax increases with borrowing over relying solely on external borrowing, because:
  - External borrowing yields higher growth but introduces volatility and real exchange rate appreciation costs and is vulnerable to changes in country risk premia.
  - Combining borrowing (with a tilt toward external borrowing where feasible) and VAT increases (the most efficiently collected tax) produces higher growth and lower debt levels.
- Improve tax revenue collection efficiency (tax administration, compliance, broadening bases, reducing exemptions) to:
  - Increase effective revenue without raising statutory rates,
  - Reduce distortionary impacts of taxation,
  - Lower the need for borrowing and improve debt sustainability.
- For countries with high initial public debt but large infrastructure needs, mitigate the tension between investment and debt sustainability by improving revenue collection and adopting mixed financing strategies, taking into account domestic market capacity and risk premia.

### F. Concluding synthesis
- A sizeable medium-term investment scaling up program, combined with reforms that enhance the efficiency of public investment and tax revenue collection, can lead to better macroeconomic outcomes than a front-loaded "big push."
- Improving both public investment efficiency and tax collection efficiency are key channels to reconcile infrastructure needs with debt sustainability and intergenerational burden sharing.
- All three countries (Cambodia, Sri Lanka, Vietnam) have substantial room to improve capital spending efficiency and tax revenue collection to support infrastructure scaling up while maintaining fiscal sustainability.

*Source: https://www.imf.org/-/media/files/publications/wp/wp1710.pdf*

### References

### References (wp1710)

### Key cited works on public investment and infrastructure
- Abiad, A., Almansour, A., Furceri, D., Mulas Granados, C., and P. Topalova. 2014. “Is It Time for an Infrastructure Push? The Macroeconomic Effects of Public Investment.” Chapter 3 in World Economic Outlook, October 2014. Washington: International Monetary Fund.
- Afonso, A. and M. St. Aubyn, 2008, “Macroeconomic Rates of Return of Public and Private Investment: Crowding-In and Crowding-Out Effects.” ECB Working Paper No. 864. Manchester School, Vol. 77, No. 51, pp. 21-39, 2009.
- Asian Development Bank (ADB), 2011, “Cambodia: Transport Sector Assessment, Strategy and Road Map.” Manila.
- Berg A., Portillo, R., Yang, S., and L.F. Zanna, 2013, “Public Investment in Resource-Abundant Developing Countries.” IMF Economic Review, 61, pp. 92-129.
- Berg A., Buffie, E., Pattillo, C., Portillo, R., Presbitero, A., and L.F. Zanna, 2015, “Some Misconceptions about Public Investment Efficiency and Growth.” IMF Working Paper, No. 15/272.
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- Briceño-Garmendia, C., Estache, A., and N. Shafik, 2004, “Infrastructure Services in Developing Countries: Access, Quality, Costs, and Policy Reform.” World Bank Policy Research Paper No. 3468.
- Buffie, E., Berg, A., Pattillo, C., Portillo, R., and L.F. Zanna, 2012, “Public Investment, Growth and Debt Sustainability: Putting Together the Pieces.” IMF Working Paper 12/144.
- Calderón, C., Easterly, W., and L. Servén, 2003, “Infrastructure Compression and Public Sector Solvency in Latin America.” Stanford University Press and the World Bank, 119-38.
- Calderón, C. and L. Servén, 2010, “Infrastructure in Latin America.” World Bank Policy Research Working Paper No. 5317.
- Canning, D. and E. Bennathan, 1999, “The Social Rate of Return on Infrastructure Investments.” World Bank Policy Research Working Paper.
- Canning, D. and P. Pedroni, 2008, “Infrastructure, Long-Run Economic Growth and Causality Tests for Cointegrated Panels.” Manchester School 76 (5): 50427.
- Central Bank of Sri Lanka, 2012, “Economic and Social Infrastructure.” Chapter 3 of Annual Report 2012.
- Dapice, D. and N.X. Thanh, 2009, “Vietnam’s Infrastructure Constraints.” UNDP, Harvard Policy Dialogue Paper.
- De Haan, J., W. Romp, and J.E. Sturm, 2007, “Public Capital and Economic Growth: Key Issues for Europe,” in G. Schwartz, A. Corbacho, and K. Funke, eds., Public Investment and Public-Private Partnerships: Addressing Infrastructure Challenges and Managing Fiscal Risks, Palgrave Macmillan UK, pp. 11-20.
- Estache, A., Speciale, B., and D. Veredas., 2006, “How Much Does Infrastructure Matter to Growth in Sub-Saharan Africa?”
- Foster, V. and C. Briceño-Garmendia, 2010, Africa’s Infrastructure: A Time for Transformation, Agence Française de Developpement and the World Bank.
- Gupta, S., Kangur, A., Papageorgiou, C., and A. Wane, 2011, “Efficiency-Adjusted Public Capital and Growth.” IMF Working Paper 11/217.
- Hulten, C., 1996, “Infrastructure Capital and Economic Growth: How Well You Use It May Be More Important Than How Much You Have.” NBER Working Paper, No. 5847.
- International Monetary Fund, 2004, “Public Investment and Fiscal Policy.” International Monetary Fund, Washington, DC.
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- International Monetary Fund, 2015, “Making Public Investment More Efficient.” The Fiscal Affairs Department Staff Report.
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- International Monetary Fund, 2016, “Macroeconomic Management When Policy Space Is Constrained: A Comprehensive, Consistent, and Coordinated Approach to Economic Policy.” Staff Discussion Note (SDN/16/09). International Monetary Fund, Washington, DC.
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### Appendix figures and descriptions (A)
- Figure A.1: Public investment (2011 PPP$-adjusted, % of GDP). Source: IMF Fiscal Affairs Department.
- Figure A.2: Private investment (2011 PPP$-adjusted, % of GDP). Source: IMF Fiscal Affairs Department.
- Figure A.3: Public capital stock (2011 PPP$-adjusted, % of GDP). Source: IMF Fiscal Affairs Department.
  - Note: Calculations using perpetuity growth method with 4 percent growth rates for investment for all countries.
- Figure A.4: Public investment performance indicators. Source: IMF Fiscal Affairs Department.
  - Notes:
    - 1/ Volatility of Investment is measured by the standard deviation of public investment (percent of GDP); 1990-2013.
    - 2/ Implementation represents the capacity of capital budget implementation (average absolute percent deviation from planned budget); 2010-2013.
    - 3/ Integrity is proxied by the 2014 Transparency International Corruption Perception Index. The higher the score, the lower corruption is.
    - 4/ Churn (RHS) is average absolute year-on-year percentage change in the distribution of government investment spending between the nine COFOG nondefense functions of government; available time period varies among countries; 2000-2013.
- Figure A.5: Measures of infrastructure access. Source: IMF Fiscal Affairs Department.
  - Note: Most recent year. Units vary to fit scale. Left hand axis: Public education infrastructure is measured as secondary teachers per 1,000 persons; Electricity production per capita as thousands of kWh per person; Roads per capita as km per 1,000 persons; and Public health infrastructure as hospital beds per 1,000 persons. Right hand axis: Access to treated water is measured as percent of population.
- Figure A.6: General government revenues (% of GDP). Source: IMF Fiscal Monitor Database.
- Figure A.7: Public debt (% of GDP). Source: Country authorities and IMF World Economic Outlook.

### Table A.1 — Calibrated parameters (Other calibrated parameters)
- Definition / Param. / Value
  - Households
    - Intertemporal elasticity of substitution of consumption ςc: 0.34
    - Intertemporal elasticity of substitution of labor supply ςn: 0.34
    - Intratemporal elasticity of substitution across consumption goods: 0.50
    - Portfolio adjustment costs parameter η: 1.0
    - Depreciation rates (%) δk, δz: 5.0
  - Firms
    - Capital’s share in value added in the traded goods sector αx: 0.55
    - Capital’s share in value added in the nontraded goods sector αn: 0.40
    - Cost share of nontraded inputs in the production of private and public capital ak, az: 0.50
  - Government
    - Share of tax adjustment through CIT (%) λτp: 25.0
    - Share of tax adjustment through PIT (%) λτl: 25.0
    - Taxes reaction to deviations from their target (%) λ1,τc, λ1,τl, λ1,τp: 25.0
    - Tax reaction to debt deviations from its target (%) λ2,τc, λ2,τl, λ2,τp: 2.0
    - User fees fraction of recurrent spending (%) μ: 50.0
    - Speed of efficiency gains in public investment and tax revenue collection %s, %τ0: 0.50
    - Public debt risk premium parameter ηg: 1.0
    - Risk-free world real interest rate r∗: 4.0
- Note: Same for the three countries. Additional details on the calibration can be found in Buffie et al. (2012).

*Source: wp1710 - References (IMF).*

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_Source: https://www.imf.org/-/media/files/publications/wp/wp1710.pdf_