Public Investment and Economic Performance in Highly Indebted Poor Countries: An Empirical Assessment

25 Pages Posted: 30 Aug 2005

See all articles by Marianna Belloc

Marianna Belloc

Sapienza University of Rome - Department of Economics

Pietro Vertova

University of Siena - Department of Economics

Abstract

Understanding how public investment affects economic performance in highly indebted low-income countries is crucial in order to implement effective fiscal policies for adjustment with growth. In this paper we provide an empirical analysis to investigate the relationship between public investment, private investment and output. A dynamic econometric procedure is implemented on a selected group of Highly Indebted Poor Countries (HIPCs). Our results provide empirical support for the crowding-in hypothesis and a positive relation between public investment and output.

Keywords: crowding-in hypothesis, economic growth, fiscal adjustment, highly indebted

JEL Classification: O23, E62

Suggested Citation

Belloc, Marianna and Vertova, Pietro, Public Investment and Economic Performance in Highly Indebted Poor Countries: An Empirical Assessment. International Review of Applied Economics, Vol. 20, No. 2, April 2006, Available at SSRN: https://ssrn.com/abstract=771906

Marianna Belloc (Contact Author)

Sapienza University of Rome - Department of Economics ( email )

Via del Castro Laurenziano 9
Rome, 00161
Italy

Pietro Vertova

University of Siena - Department of Economics ( email )

Piazza S. Francesco, 7
Siena, I-53100
Italy

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