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Business and Economics > Investments: Stocks

You are looking at 1 - 10 of 21 items for :

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Cover IMF Working Papers
Benchmarking Infrastructure Using Public Investment Efficiency Frontiers
Mr. Javier Kapsoli
,
Ms. Tewodaj Mogues
, and
Ms. Genevieve Verdier
With limited financing options, increasing investment efficiency will be a critical avenue to building infrastructure for many countries, particularly in the context of post-pandemic recovery and rising debt emanating from higher energy costs and other pressures. Estimating investment efficiency, however, presents many methodological pitfalls. Using various methods—–stochastic frontier analysis, data envelopment analysis (DEA), and bootstrapped DEA—this paper estimates efficiency scores for a wide range of countries employing metrics of infrastructure quantity and utilization. We find that efficiency scores are relatively robust across methodologies and data used. A considerable efficiency gap exists: Removing all inefficiencies could increase infrastructure output by 55 percent overall, when averaging across 12 estimation approaches—in particular, by 45 percent for advanced economies, 54 percent for emerging countries, and 65 percent for low income countries. Infrastructure output would increase by a still-sizeable 30 percent if instead of eliminating all efficiency, countries achieved the efficiency level of their income group’s 90th percentile.
Keywords:
public investment; efficiency; infrastructure; benchmarking; Benchmarking infrastructure; infrastructure output; output index; data envelopment analysis; income group; Public investment spending; Income; Stocks; Caribbean
Cover IMF Working Papers
Greece's Investment Gap
Shiqing Hua
,
Ms. Marina Mendes Tavares
, and
Ms. Xin C Xu
Greece’s investment rate plunged following the Sovereign Debt Crisis (SDC) and remained one of the lowest in the world in 2019. This paper explores recent investment dynamics and compares them against estimated benchmarks. Our results suggest that Greece has been under-investing since the SDC, with private investment notably lagging behind. The estimated investment gap ranges from 1.6–8 percent of GDP in 2019. Structural impediments have constrained corporate investment, while business cycle and balance sheet developments have held back household investment. Structural reforms are recommended to remove bottlenecks to corporate investment, improve efficiency of public investment, and boost household investment.
Keywords:
Investment gap; capital stock; structural reforms; investment gap; estimating benchmark investment; household investment; investment rate; investment dynamics; Private investment; Stocks; Public investment spending; Income; Europe; Global
Cover IMF Working Papers
Is the Public Investment Multiplier Higher in Developing Countries? An Empirical Exploration
Mr. Alejandro Izquierdo
,
Mr. Ruy Lama
,
Juan Pablo Medina
,
Jorge Puig
,
Daniel Riera-Crichton
,
Mr. Carlos A. Végh Gramont
, and
Guillermo Javier Vuletin
Over the last decade, empirical studies analyzing macroeconomic conditions that may affect the size of government spending multipliers have flourished. Yet, in spite of their obvious public policy importance, little is known about public investment multipliers. In particular, the clear theoretical implication that public investment multipliers should be higher (lower) the lower (higher) is the initial stock of public capital has not, to the best of our knowledge, been tested. This paper tackles this empirical challenge and finds robust evidence in favor of the above hypothesis: countries with a low initial stock of public capital (as a proportion of GDP) have significantly higher public investment multipliers than countries with a high initial stock of public capital. This key finding seems robust to the sample (European countries, U.S. states, and Argentine provinces) and to the identification method (Blanchard-Perotti, forecast errors, and instrumental variables). Our results thus suggest that public investment in developing countries would carry high returns.
Keywords:
WP; investment multiplier; Fiscal multiplier; Public investment; Stock of public capital; Crowding-in; multiplier estimate; public investment multiplier; multiplier calculation; government spending multiplier; Public investment spending; Stocks; Government consumption; Private investment; Global
Cover IMF Working Papers
Indonesia's Public Wealth: A Balance Sheet Approach to Fiscal Policy Analysis
Ms. Majdeline El Rayess
,
Avril Halstead
,
Jason Harris
,
Mr. John Ralyea
, and
Alexander F. Tieman
Public sector balance sheets (PSBS) provide a framework for comprehensive and deep analysis of fiscal risks and policies. To illustrate these benefits, this paper shows how PSBS analysis can be applied to assess risks to Indonesia’s public sector stemming from its public corporations. The paper also shows that the government’s plans to finance a ramp-up in public investment with additional tax revenue increases both economic growth and public wealth.
Keywords:
WP; asset; GDP; real GDP; investment; balance sheet; Public Sector Balance Sheet; Intertemporal Fiscal Balances; Public Investment; Indonesia.; asset revaluation; return on equity; public sector; baseline GDP; nonfinancial public corporation asset; cash flow; asset instrument; current ratio; Business enterprises; Financial statements; Public sector; Public investment spending; Stocks
Cover IMF Working Papers
Policy Trade-Offs in Building Resilience to Natural Disasters: The Case of St. Lucia
Mr. Alessandro Cantelmo
,
Mr. Leo Bonato
,
Mr. Giovanni Melina
, and
Mr. Gonzalo Salinas
Resilience to climate change and natural disasters hinges on two fundamental elements: financial protection —insurance and self-insurance— and structural protection —investment in adaptation. Using a dynamic general equilibrium model calibrated to the St. Lucia’s economy, this paper shows that both strategies considerably reduce the output loss from natural disasters and studies the conditions under which each of the two strategies provides the best protection. While structural protection normally delivers a larger payoff because of its direct dampening effect on the cost of disasters, financial protection is superior when liquidity constraints limit the ability of the government to rebuild public capital promptly. The estimated trade-off is very sensitive to the efficiency of public investment.
Keywords:
WP; investment; adaptation capital; risk premium; Climate Change; Natural Disasters and Their Management; Government Policy; resilient capital; ECCU debt target; public capital; debt data; targeted debt reduction; Natural disasters; Public investment and public-private partnerships (PPP); Public investment spending; Stocks; Caribbean
Cover IMF Staff Country Reports
Uganda: Technical Assistance Report-Initiating the Stock-Taking of the Public Investment Program
International Monetary Fund. Fiscal Affairs Dept.
This Technical Assistance Report discusses the initiation of the stock-taking of the public investment program in Uganda. This stock-taking will provide a basis for better budgeting by providing information on the existing multi-year project commitments, and the incremental recurrent costs for operation and maintenance of the assets delivered. It will also identify a basic information structure for each project and subsequently collect a data baseline, providing a foundation for more robust project monitoring. It will aid the management of the overall project portfolio. By identifying the scale of existing multi-annual commitments, it will avoid adding projects to the investment pipeline, which cannot be financed under the Medium Term Expenditure Framework.
Keywords:
ISCR; CR; PIP information; project data need; information reliability; input restriction; project template; project information; Public investment and public-private partnerships (PPP); Public investment spending; Budget planning and preparation; Data collection; Stocks
Cover IMF Staff Country Reports
Belgium: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes productivity growth in Belgium. It highlights that Belgium’s subdued productivity growth can be explained by a combination of sectoral employment shifts, barriers to competition, the declining quality of infrastructure, and an aging workforce. The shift of employment toward lower productivity service sectors, common to many advanced economies, has been more pronounced in Belgium and explains half of the productivity gap with neighboring countries. Population aging is another secular factor that has contributed to the productivity slowdown. In addition, barriers to competition in some service sectors have lowered productivity growth and raised rents in these sectors.
Keywords:
ISCR; CR; GDP; public Investment; productivity growth; frontloaded investment boost; productivity slowdown; productivity-enhancing reform option; firms total factor productivity; Productivity; Public investment spending; Labor productivity; Total factor productivity; Infrastructure; Global
Cover IMF Working Papers
Efficiency-Adjusted Public Capital, Capital Grants, and Growth
Ernesto Crivelli
Recent literature has explored the relationship between efficiency-adjusted public capital and economic growth. A debate on whether capital grants, and especially EU funds actually contribute to growth has gained prominence lately. This paper empirically assesses the relationship between the quality of public investment, capital grants, and growth in a sample of 43 emerging and peripheral economies over 1991-2015. To this end, the contribution of public capital to growth is estimated using efficiency-adjusted public capital stock series, constructed reflecting the quality of public investment management institutions. In addition, the determinants of effective public investment are analyzed. The results suggest that capital grants contribute positively to effective public investment, and the latter is significant in explaining variations in economic growth. Finally, the paper illustrates the impact of raising EU funds absorption on potential growth in emerging and peripheral EU countries.
Keywords:
WP; EU funds; capital stock; CESEE-EU country; EU member; investment
Cover IMF Working Papers
Some Misconceptions about Public Investment Efficiency and Growth
Mr. Andrew Berg
,
Mr. Edward F Buffie
,
Ms. Catherine A Pattillo
,
Mr. Rafael A Portillo
,
Mr. Andrea F Presbitero
, and
Luis-Felipe Zanna
We reconsider the macroeconomic implications of public investment efficiency, defined as the ratio between the actual increment to public capital and the amount spent. We show that, in a simple and standard model, increases in public investment spending in inefficient countries do not have a lower impact on growth than in efficient countries, a result confirmed in a simple cross-country regression. This apparently counter-intuitive result, which contrasts with Pritchett (2000) and recent policy analyses, follows directly from the standard assumption that the marginal product of public capital declines with the capital/output ratio. The implication is that efficiency and scarcity of public capital are likely to be inversely related across countries. It follows that both efficiency and the rate of return need to be considered together in assessing the impact of increases in investment, and blanket recommendations against increased public investment spending in inefficient countries need to be reconsidered. Changes in efficiency, in contrast, have direct and potentially powerful impacts on growth: “investing in investing” through structural reforms that increase efficiency, for example, can have very high rates of return.
Keywords:
WP; capital stock; production function; rate of return
Cover Policy Papers
Improving Public Investment Efficiency in the G-20
International Monetary Fund
Through the provision of both social and economic infrastructure, public investment can serve as an important catalyst for economic growth. A significant body of theoretical and empirical research underscores the positive relationship between investment in high-quality public infrastructure and economy-wide productivity.1 Against the background of a steady decline in public investment as a share of GDP in advanced economies, evidence of infrastructure bottlenecks in emerging economies, and the sluggish global economic recovery, the G-20 has called for ramping up public investment to raise long-run economic growth (G-20, 2014).2 However, the economic and social impact of public investment crucially depends on its efficiency. Despite anecdotal evidence of projects plagued by time delays, cost overruns, and inadequate maintenance, there are few robust empirical studies of the determinants of public investment efficiency. This paper explores the link between public investment management (PIM) institutions and the efficiency of public investment for the G-20 countries. Based on the analysis from a recent IMF study, the paper finds that better PIM enhances public infrastructure quality, and pinpoints key institutional reforms needs to boost public investment efficiency (IMF 2015). These findings and recommendations are based on a comprehensive data set on investment, infrastructure and capital stocks, and two analytical innovations: (i) a new cross-country Public Investment Efficiency Index (PIE-X); and (ii) a new Public Investment Management Assessment (PIMA) which is applied to G-20 countries.
Keywords:
PP; G20 industrial nations; country; evaluation; government; efficiency gap; efficiency frontier; stop-go investment policy; management cycle; GG investment growth; performance measure; selected G-20 economy; measures in the G-20; quite a few emerging G-20 country; management practice; PPP capital stock in G-20 economy; Public investment spending; Public investment and public-private partnerships (PPP); Infrastructure; Public Investment Management Assessment (PIMA); Stocks; Global