02284cas a2200277 a 4500 AALejournalIMF016064 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513521114 1018-5941 BD-DhAAL BD-DhAAL Izquierdo, Alejandro. Is the Public Investment Multiplier Higher in Developing Countries? : An Empirical Exploration / Alejandro Izquierdo, Ruy Lama, Juan Medina, Jorge Puig. Washington, D.C. : International Monetary Fund, 2019. 1 online resource (47 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Over the last decade, empirical studies analyzing macroeconomic conditions that may affect the size of government spending multipliers have flourished. Yet, in spite of their obvious public policy importance, little is known about public investment multipliers. In particular, the clear theoretical implication that public investment multipliers should be higher (lower) the lower (higher) is the initial stock of public capital has not, to the best of our knowledge, been tested. This paper tackles this empirical challenge and finds robust evidence in favor of the above hypothesis: countries with a low initial stock of public capital (as a proportion of GDP) have significantly higher public investment multipliers than countries with a high initial stock of public capital. This key finding seems robust to the sample (European countries, U.S. states, and Argentine provinces) and to the identification method (Blanchard-Perotti, forecast errors, and instrumental variables). Our results thus suggest that public investment in developing countries would carry high returns. Mode of access: Internet Lama, Ruy. Medina, Juan. Puig, Jorge. IMF Working Papers; Working Paper ; No. 2019/289 Full text available on IMF http://elibrary.imf.org/view/journals/001/2019/289/001.2019.issue-289-en.xml IMF e-Library