Publication: Government Spending Multipliers in Developing Countries : Evidence from Lending by Official Creditors
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Date
2014-10
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Published
2014-10
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Abstract
This paper uses a novel loan-level dataset covering lending by official creditors to developing country governments to construct an instrument for government spending. These loans typically finance multi-year spending projects, with disbursements linked to the stages of project implementation. The identification strategy exploits the long lags between approval and eventual disbursement of these loans to isolate a predetermined component of public spending associated with past loan approval decisions taken before the realization of contemporaneous shocks. In a large sample of 102 developing countries over the period 1970-2010, the one-year spending multiplier is reasonably-precisely estimated to be around 0.4.
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- Cited 53 times in Scopus (view citations)