Macroeconomic effects of public investment in South-East Europe

Masten, Igor; Gnip, Ana Grdović

doi:10.1016/j.jpolmod.2019.05.005

Cited by 9 publications

(10 citation statements)

References 13 publications

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“…Using a similar methodology, Masten and Grdovic Gnip [42] conduct research for countries in Southeast Europe and show significant multiplier effects of public investment on growth. The results of the study argue that the main way in which public investment generates such multiplier effects seems to be to stimulate private investment.…”

Section: Literature Reviewmentioning

confidence: 99%

“…A smaller number of studies on countries in Southeastern Europe reveal significant multiplier effects of public investment on GDP and show that there is no crowding-out effect of public investment on private investment [42,47]. Thus, there is a lack of research in terms of analysing the topic of interest in the former socialist states of Central and Eastern Europe.…”

Section: Literature Reviewmentioning

confidence: 99%

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The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe

Ocolișanu

Dobrotă

2022

Sustainability

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The relationship between sustainable growth and public investment, considered one of the key factors, is a topic of interest in the context of globally adopted sustainable development strategies and current budgetary constraints, especially in the case of tight budgets in developing countries, which constrain public investment more than current expenditure, for political or other reasons. Although there are endogenous growth patterns that incorporate public spending as a factor that promotes growth, the findings in the empirical literature provide contradictory results. The study is an empirical investigation into the effects of public investment on sustainable economic growth in emerging EU and Central European countries. For the period 1995–2019, the research shows that, in most of the countries included in the sample, the long-term impact of a public capital shock on GDP is estimated to be negative. The analysis of the effect of public investment on sustainable economic growth was performed by applying the VAR model and impulse response functions, the results being confirmed by estimating the accumulated multiplier to obtain the GDP response to a shock equal to a standard deviation of public capital.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe

Ocolișanu

Dobrotă

2022

Sustainability

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“…They presented that an increase in public investment promotes economic growth both in the short and long run. Masten and Grdović Gnip [27] studied the dynamic effects on macroeconomic implications of public investment in South-East Europe by the LP methodology. They also confirmed that public investment had a positive effect on GDP and private investment.…”

Section: Literature Reviewmentioning

confidence: 99%

Economic Growth, Public and Private Investment: A Comparative Study of China and the United States

Arı

Кочкодан

2020

Sustainability

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Public and private investments play a central role in production functions by providing the required capital for development. There are many studies in the literature investigating the linear macroeconomic relations based on public and private investment in cross-country and country-specific analyses by focusing on various perspectives and methodologies. However, there is a gap in the literature in exploring nonlinear causal relations among public-private investment and economic growth, particularly in the U.S. and China, in order to comparatively discuss policy implementations and potential implications. To narrow the gap, this study investigates nonlinear causal relationships between public-private investment and gross domestic product in the U.S. and China, which are the largest economies comprising about 40 percent of the global gross domestic product (GDP) in 2018. These countries show a similar pattern in economic growth and implementing sustainable development goals, although they follow considerably different socio-economic regimes and fall into different development levels (i.e., developed and developing countries). Therefore, there should be a common underlying mechanism in macroeconomic factors that fosters economic development. In this regard, the motivation behind the study is to reveal a common, but hidden, behavior of the nonlinear causal relations of given macroeconomic factors in these countries to make recommendations about sustainable economic growth for policymakers. To this end, there are three main contributions of the paper. First, the research finds nonlinear dependencies in the related time series between 1960–2015, thereby nonlinear causality tests are performed to reach more reliable information than the linear causality. Second, the study formulates a feedback loop between public and private investment through economic growth, which indicates that public and private investment should stimulate each other directly or indirectly (i.e., through the GDP). Third, the direction of the causality does not affect sustainable economic growth as long as it exists directly or indirectly.

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“…However, only a smaller group of studies has empirically estimated the real size of multipliers for public investment (Auerbach and Gorodnichenko, 2012;IMF, 2014;Abiad et al, 2016;Alichi et al, 2019;Masten and Grdović, 2019;Deleidi et al, 2020 and2021a;Petrović et al, 2021). While these studies provide some important evidence confirming the effective role that public investment plays in promoting economic growth, the current political debate increasingly focuses on the allocation of public investment and calls for more detailed analyses that distinguish among different categories of investment and identify which ones have the highest and most persistent multiplicative effect on GDP.…”

Section: Introductionmentioning

confidence: 99%

Public investment multipliers by functions of government: An empirical analysis for European countries

Saccone

Posta

Marelli

et al. 2022

Structural Change and Economic Dynamics

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Macroeconomic effects of public investment in South-East Europe

Cited by 9 publications

References 13 publications

The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe

The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe

Economic Growth, Public and Private Investment: A Comparative Study of China and the United States

Public investment multipliers by functions of government: An empirical analysis for European countries

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