Public Spending for Long-Run Growth : A Practitioners' View
By financing public goods and services that enhance productivity and promote private investment, public spending is widely believed to be critical for long-run growth. Such effects are distinct from any short-run Keynesian response to a public spen...
| Main Authors: | , , |
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| Format: | Brief |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2012/12/17012446/public-spending-long-run-growth-practitioners-view http://hdl.handle.net/10986/17061 |
| Summary: | By financing public goods and services
that enhance productivity and promote private investment,
public spending is widely believed to be critical for
long-run growth. Such effects are distinct from any
short-run Keynesian response to a public spending stimulus.
While a short-run response generally operates through
aggregate demand, long-run growth effects alter aggregate
supply conditions. While academic literature generally
supports the belief that public spending promotes growth in
the long run, understanding which public expenditure
allocations can trigger such effects in a particular country
setting is challenging in practice. The objective of this
note1 is to review the trade-offs faced by fiscal policy
makers in developing countries who are considering using
public expenditure policy as an instrument to promote long
run growth, provide guidance from the empirical literature,
and review the types of data sources that are helpful in
this context. |
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