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

34 Pages Posted: 4 Jun 2010

See all articles by Markus Bruckner

Markus Bruckner

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Anita Tuladhar

International Monetary Fund (IMF) - European Department

Date Written: April 2010

Abstract

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.

Keywords: Economic models, Financial crisis, Fiscal policy, Governance, Government expenditures, Japan, Public investment

Suggested Citation

Bruckner, Markus and Tuladhar, Anita, Public Investment as a Fiscal Stimulus: Evidence from Japan's Regional Spending During the 1990s (April 2010). IMF Working Paper No. 10/110, Available at SSRN: https://ssrn.com/abstract=1620244

Markus Bruckner

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

Anita Tuladhar

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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