Fiscal Multipliers and Institutions in Peru : Getting the Largest Bang for the Sol

Author/Editor:

Svetlana Vtyurina ; Zulima Leal

Publication Date:

July 22, 2016

Electronic Access:

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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:

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.

Series:

Working Paper No. 16/144

Subject:

English

Publication Date:

July 22, 2016

ISBN/ISSN:

9781498381017/1018-5941

Stock No:

WPIEA2016144

Format:

Paper

Pages:

24

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