Fiscal Multipliers and Institutions in Peru: Getting the Largest Bang for the Sol
July 22, 2016
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Summary
With the end of the commodity super cycle, Peru’s potential growth has declined, raising questions of what government policies could do to help boost growth, including over the medium-term. Our econometric analysis shows that public investment multipliers have a larger effect on growth than current spending or tax-related stimulus in the short and medium terms. Peru’s low debt and financial savings grants fiscal space for increasing investment spending, which could also entice and complement private investment, provided the former is efficient, fiscally sustainable and complemented by further reforms in public investment management and changes to the decentralization framework.
Subject: Capital spending, Current spending, Expenditure, Infrastructure, National accounts, Public investment and public-private partnerships (PPP), Public investment spending
Keywords: Capital spending, Current spending, decentralization, fiscal policy, fiscal sustainability, Global, Infrastructure, infrastructure gap, investment, investment project, investment promotion initiative, investment spending, management play, multipliers, nonlinear models, Peru, private sector investment, Public investment and public-private partnerships (PPP), public investment management, Public investment spending, spending, WP
Pages:
24
Volume:
2016
DOI:
Issue:
144
Series:
Working Paper No. 2016/144
Stock No:
WPIEA2016144
ISBN:
9781498381017
ISSN:
1018-5941
