Public Investment and the Burden of the Public Debt: Comment

1989 ◽  
Vol 56 (2) ◽  
pp. 529
Author(s):  
Marilyn R. Flowers
Keyword(s):  
Public Debt ◽  
Public Investment ◽  
The Public

scholarly journals The Risk of Long-Term Financing of Public Investments

2019 ◽  
Vol 2 (2) ◽  
pp. 42
Author(s):  
Krzysztof Jarosiński ◽  
Benedykt Opałka
Keyword(s):  
Public Debt ◽  
Negative Impact ◽  
Capital Expenditure ◽  
Public Investment ◽  
Point Of View ◽  
Risk Category ◽  
Investment Projects ◽  
The Public ◽  
Public Investments ◽  
The Impact

The risk of financing of public investments is a phenomenon that accompanies development processes in a permanent manner. Investments in the public sector are generally characterized by relatively long implementation cycles and involve significant capital expenditure and the necessity of often parallel running a large number of investment projects. In the processes of this type of investment a specific risk category of financing of this type of investment is quite often taken into account, given that such projects are financed mainly from budgetary resources: the state budget and self-government budgets. Economic practice indicates an importance of the proper selection of the method of the financing of new investments and taking into account new funds from various sources. This situation is often the result of a shortage of budgetary resources from which public investments could be financed. There may be difficulties in financing investments resulting from the emergence of a risk of budgetary deficit and the public debt. This risk may have a negative impact on investment decisions and may adversely affect the future course of ongoing investment projects. The purpose of the paper is to undertake studies on the conditions of financing investments from the point of view of the possibility of budget deficit and public debt and the impact of changes in the financial situation on the overall level of risk of public investment. The text is an invitation to undertake a broader discussion on financing public investments in conditions of limited public financial resources.

scholarly journals Public Investment in Bolivia

2019 ◽  
Vol 2019 (151) ◽  
Author(s):  
Yehenew Endegnanew ◽  
Dawit Tessema
Keyword(s):  
Public Debt ◽  
Large Scale ◽  
Structural Model ◽  
Public Investment ◽  
External Current ◽  
Medium Term ◽  
The Public ◽  
Current Account Deficits ◽  
Social And Economic Development ◽  
The Face

Bolivia’s “Patriotic Agenda 2025” sets targets for social and economic development propelled by state-led industrialization under a five-year development plan (2016–2020). Large-scale public investment has aimed to fill infrastructure gaps and raise productivity to ensure sustained medium-term growth. Pursuit of these goals in a period of lower hydrocarbon revenues has, however, contributed to widening fiscal and external current account deficits. The paper uses a structural model to outline different scenarios for the level of public investment in the face of declining hydrocarbon revenues. It finds that if public investment is sustained at current levels as a share of GDP while hydrocarbon revenues continue to decline, the sustainability of the public debt could be called into question.

DEBT POLICY RULE, PRODUCTIVE GOVERNMENT SPENDING, AND MULTIPLE GROWTH PATHS: A NOTE

2012 ◽  
Vol 17 (4) ◽  
pp. 947-954 ◽  
Author(s):  
Alexandru Minea ◽  
Patrick Villieu
Keyword(s):  
Public Debt ◽  
Public Investment ◽  
High Growth ◽  
Growth Effect ◽  
The Public ◽  
Long Run ◽  
Endogenous Growth Model ◽  
Productive Government Spending ◽  
Definition Of ◽  
Debt Policy

In a very interesting endogenous growth model, Futagami, Iwaisako, and Ohdoi [Macroeconomic Dynamics 12 (2008), 445–462] study the long-run growth effect of borrowing for public investment. Their model exhibits (i) the multiplicity of balanced growth paths (BGPs) in the long run (two steady states) and (ii) a possible indeterminacy of the transition path to the high-growth BGP. The goal of this note is to show that their results depend on a sharp assumption, namely the definition of the public debt target as a ratio to private capital. If the target is defined in terms of public debt–to–GDP ratio, both results vanish: the model exhibits a unique BGP (no multiplicity) and the adjustment path to this unique equilibrium is determinate (no indeterminacy).

scholarly journals Fiscal Rule and Public Investment in Chile

2021 ◽  
Author(s):  
J. Rodrigo Fuentes ◽  
Klaus Schmidt-Hebbel ◽  
Raimundo Soto
Keyword(s):  
Public Debt ◽  
Negative Impact ◽  
Public Investment ◽  
Two Dimensions ◽  
The Public ◽  
Fiscal Rule ◽  
Substantial Progress ◽  
Escape Clauses ◽  
Empirical Approaches

This paper reviews the design and operation of the Chilean fiscal rule in the past 30 years. Using different empirical approaches, we assess its impact on fiscal procyclicality, public debt, and public investment. While there has been substantial progress in building a modern institutional framework for fiscal policy, we find that the rule is incomplete in two dimensions: it lacks an escape clause, and it needs to supplement the budget balance rule with a debt rule. The former is seen in the pervasive inability of the authorities to steer fiscal accounts back to their long-term sustainable path after the rule was breached the rule in 2009. The latter issue is illustrated by the speedy build-up of the public debt as a result of the need to finance fiscal deficits. We do not find, nevertheless, a negative impact of the rule on public investment. We propose reforms to improve on transparency and accountability, as well as to supplement the rule with escape clauses and a debt anchor.

scholarly journals ACUMULACIÓN DE DEUDA PÚBLICA Y POLÍTICA FISCAL EN AMÉRICA LATINA

2020 ◽  
Vol 79 (314) ◽  
pp. 3
Author(s):  
Josué Zavaleta González
Keyword(s):  
Latin America ◽  
Fiscal Policy ◽  
Gross Domestic Product ◽  
Economic Crisis ◽  
Public Debt ◽  
Public Investment ◽  
The Public ◽  
Debt Accumulation ◽  
Fiscal Austerity ◽  
America Latina

<p>La acumulación de deuda pública es uno de los problemas que más ocupa la atención del gobierno de cualquier economía. En relación con esto, desde un enfoque ortodoxo, las medidas de austeridad fiscal son la única alternativa para evitar y contrarrestar un grave problema de endeudamiento público. No obstante, recientemente se ha demostrado que la capacidad de estas medidas para resolver este problema es limitada y que incluso podrían agravarlo. En este contexto, y como una respuesta a las dificultades económicas que impondrá la crisis económica mundial por Covid-19, en este artículo demostramos tanto de forma teórica como empírica que una política fiscal expansiva, enfocada en incrementar la inversión pública, tiene la capacidad de reducir, o al menos controlar, la acumulación de deuda pública como porcentaje del producto interno bruto (PIB).</p><p> </p><p align="center">PUBLIC DEBT ACCUMULATION AND FISCAL POLICY IN LATIN AMERICA</p><p align="center"><strong>ABSTRACT </strong></p>Public debt accumulation is one of the problems to which governments pay more attention. In this regard, from an orthodox approach, fiscal austerity measures are the unique alternative to avoid and counteract a serious problem of public debt accumulation. However, it has recently been shown that the capacity of these policies to respond to this problem is limited and even could aggravate it. In this context, and as a response to the economic difficulties resulted from the global economic crisis imposed by the Covid-19, the aim of this paper is to show theoretically and empirically that an expansive fiscal policy, focused on increasing public investment, could reduce, or at least control, the public debt accumulation as a percentage of Gross Domestic Product (GDP).

scholarly journals HOW FAR FISCAL DOMINANCE MATTERS FOR A DEVELOPING ECONOMY

2021 ◽  
Vol 3 (38) ◽  
pp. 214-221
Author(s):  
S. Shvets
Keyword(s):  
Public Debt ◽  
Public Investment ◽  
Sustainable Growth ◽  
Investment Efficiency ◽  
Developing Economy ◽  
Growth Path ◽  
Fiscal Multiplier ◽  
The Public ◽  
Fiscal Dominance ◽  
Effective Policy

Abstract. The growing public debt that intensifies with a frequency of economic crises grasps a high rating in the current economic debates. There is an urgent need for implementing an effective policy regime targeted at handling the public debt problem. The fiscal dominance policy, usually practiced to ensure strong recovery and growth, has a strict guideline for identifying a degree of fiscal expansion and monetary accommodation. Given a dilemma between growth and debt burden, the government should mobilize the most effective policy instrument targeted at the highest fiscal multiplier and does not cross a debt-to-GDP threshold ratio. Following an effective practice of fiscal management, this instrument is associated with public investment. The paper aims to assess the magnitude of the public investment multiplier by following a stable growth path limited by a prescribed debt limitation for a developing economy. To achieve the goal, we use an elaborated New Keynesian model, which besides an active fiscal and monetary stances, also includes a high share of non-Ricardian households, the separability in preferences between private and government consumption, a low level of public investment efficiency, and the substantiated degree of nominal and real rigidities. The obtained present value cumulative output multiplier for public investment grasps the point 2.0 in maximum over two years of the impulse response function. The multiplier effect proves to be high enough to offset temporary public debt growth and maintain a sustainable growth path over the long run. The verified measure of fiscal dominance contradicts an active monetary stance and, among other things, has to be counterbalanced by an appropriate efficiency and productivity of public investment and degree of price stickiness. Keywords: fiscal policy, monetary policy, fiscal-monetary interaction, fiscal dominance, fiscal multiplier, DSGE modeling. JEL Classification O47, E63, H63, D58 Formulas: 1; fig.: 2; tabl.: 0; bibl.: 21.

Public Investment and Its Effects on the Burden of the Public Debt

1987 ◽  
Vol 54 (1) ◽  
pp. 145 ◽  
Author(s):  
Jurgen Backhaus ◽  
Randall Holcombe ◽  
Asghar Zardkoohi
Keyword(s):  
Public Debt ◽  
Public Investment ◽  
The Public

Public Investment and the Burden of the Public Debt: Reply

1989 ◽  
Vol 56 (2) ◽  
pp. 532 ◽  
Author(s):  
Jurgen G. Backhaus ◽  
Randall G. Holcombe ◽  
Asghar Zardkoohi
Keyword(s):  
Public Debt ◽  
Public Investment ◽  
The Public

scholarly journals Belize

2020 ◽  
Vol 20 (221) ◽  
Author(s):  
Keyword(s):  
Public Debt ◽  
Sharp Increase ◽  
Public Investment ◽  
Public Capital ◽  
National Strategy ◽  
The Public ◽  
Capital Budget ◽  
The Past ◽  
Fiscal Space ◽  
The Government

The level of public investment in Belize has varied over the past years in the context of existing constraints. The sharp increase in public debt has limited available fiscal space.1 This has resulted in an increase in externally financed investments as a share of the capital budget and a growing interest in public private partnerships (PPPs) to help achieve the government of Belize’s national strategy objectives.2 However, the correlation between Belize’s public investment and GDP growth remains weak, and the public capital stock as a ratio to GDP shows a sharp deterioration, possibly pointing to investment inefficiencies.

Small Changes

2020 ◽  
pp. 17-51
Author(s):  
James Livesey
Keyword(s):  
Eighteenth Century ◽  
Public Debt ◽  
Public Investment ◽  
Credit System ◽  
Public Funds ◽  
The Public ◽  
The Road ◽  
Late Eighteenth Century ◽  
Public Credit ◽  
Late Eighteenth

This chapter explains mass popular involvement in public debt. It provides an index for the complex ways in which the public credit system was beginning to be used by different kinds of people. These ordinary people saw the public funds as secure and reliable enough to be part of their own planning for their future. This small but significant trend of popular investment sat among a series of patterns of continuity and discontinuity in public investment in the sénéchausée in the late eighteenth century. The chapter also reveals the changing nature of debt and money in the eighteenth-century Languedoc, which remained relatively stable. Credit and debt were everyday features of European life. An older historiography saw debt as the road to impoverishment for peasants and other nonelites. In those accounts urban bourgeois offered credit to economically marginal peasants with a view to their eventual default and the expropriation of their land.

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