Tax and investment multipliers in infrastructure

ABSTRACT IN ENGLISH: This article develops a dynamic and stochastic general equilibrium model to analyze the different effects of government expenditures based on consumption and on investment for the Brazilian economy. The model includes public capital as a production factor and analyzes the impact...

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Bibliographic Details
Published in:Revista brasileira de economia 2015-01, Vol.69 (1), p.75-104
Main Author: Moura, Guilherme V
Format: Article
Language:Portuguese
Subjects:
Brazil
Consumption
Equilibrium models
Fiscal policy
General economic equilibrium
Gross domestic product
Investment expenditure
Investment multipliers
Public expenditure
Public investment
Taxes
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Summary:ABSTRACT IN ENGLISH: This article develops a dynamic and stochastic general equilibrium model to analyze the different effects of government expenditures based on consumption and on investment for the Brazilian economy. The model includes public capital as a production factor and analyzes the impact of public investment on the marginal productivity of private inputs and on GDP. The analysis is based on present value multipliers, allowing the consideration of the dynamic effects of fiscal policy. The results show the advantages of a fiscal policy based on investment in comparison to a fiscal policy based on consumption expenditures. // ABSTRACT IN PORTUGUESE: Este trabalho utiliza um modelo DSGE para calcular multiplicadores a valor presente para gastos do governo com consumo e investimento. Os resultados mostram que o efeito inicial do aumento do consumo público sobre o PIB é positivo, porém, o efeito de longo prazo é menor do que um em todos os cenários analisados. Por outro lado, gastos com investimento acarretam não só um impacto inicial positivo, mas também um efeito de longo prazo superior a um mesmo para valores da elasticidade produto do capital público muito baixos, apontando para as vantagens de uma política fiscal baseada em gastos com investimento. Reprinted by permission of Fundação Getulio Vargas
ISSN:0034-7140
DOI:10.5935/0034-7140.20150004