Public Investment as a Fiscal Stimulus: Evidence from Japan’s Regional Spending During the 1990s

Author/Editor:

Anita Tuladhar ; Markus Bruckner

Publication Date:

April 1, 2010

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:

How effective was public investment in stimulating the Japanese economy during the economic stagnation of the 1990s? Using a dataset of regional public investment spending, we find that investment multipliers were higher than for public consumption, although they were relatively low and declining over time. The paper also finds that the effectiveness of economic infrastructure investment, implemented mainly by the central government, is lower than that of social investment mostly undertaken by local governments. These results suggest that while public investment may yield higher output effects than other spending, its effectiveness depends upon its composition, the level of government implementation, and supply side factors.

Series:

Working Paper No. 2010/110

Subject:

Expenditure Private investment Public debt Public investment spending Revenue administration

English

Publication Date:

April 1, 2010

ISBN/ISSN:

9781455200696/1018-5941

Stock No:

WPIEA2010110

Pages:

34

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