Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/251319 
Year of Publication: 
2020
Series/Report no.: 
Development Research Working Paper Series No. 06/2020
Publisher: 
Institute for Advanced Development Studies (INESAD), La Paz
Abstract (Translated): 
Since 2006, Bolivia began an intensive public investment program under its development plan. Fourteen years later, I analyze the role of this expansionary fiscal policy. In this regard, I develop a Dynamic Stochastic General Equilibrium Model for a small, open and developing country. Among the main results, I highlight that public investment has two roles in the Bolivian economy: positive externality and opportunity cost. First, an increase in public investment generates a positive externality allowing higher levels of economic growth as well as turns into a mechanism to cushion the negative effects of export price shocks. Second, the intensive use of resources for public investment has a crowding out effect on private investment, and deteriorates the public finances in the medium term with the increase of both public debt and fiscal deficit.
Subjects: 
Public investment
fiscal policy
business cycles
DSGE
JEL: 
E62
H5
E32
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.