| . | . | Long-run effects of increasing individual components of public investment . | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| . | . | (Increase of one percent of initial GDP) . | |||||||||
| . | . | [a] . | [b] . | [c] . | [d] . | [e] . | |||||
| . | . | Infrastructure . | Basic education . | Upper-level education . | Basic education . | Upper-level education . | |||||
| . | IRR [1] . | IRRz = 20% . | IRRb = 12% . | IRRu = 10% . | IRRb = 8% . | IRRu = 5% . | |||||
| . | [2] . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . |
| . | [3] . | . | . | . | . | . | . | . | . | . | . |
| Real GDP | 4.6 | 5.1 | 10.1 | 10.1 | 6.2 | 9.1 | 7.3 | 7.3 | 4.7 | 6.9 | |
| Real aggregate consumption | 3.8 | 4.3 | 10.3 | 10.2 | 6.5 | 9.3 | 7.1 | 7.0 | 4.6 | 6.7 | |
| Private capital stock | 3.9 | 4.8 | 10.6 | 10.5 | 2.7 | 8.4 | 7.6 | 7.5 | 2.1 | 6.4 | |
| Sectoral output | |||||||||||
| Agriculture | 4.6 | 4.1 | 9.5 | 9.6 | 3.0 | 0.4 | 6.8 | 6.8 | 2.2 | 0.2 | |
| Formal sector | 4.8 | 6.5 | 10.0 | 9.9 | 10.1 | 20.8 | 7.1 | 7.0 | 7.4 | 15.4 | |
| Informal sector | 4.6 | 5.0 | 11.3 | 11.3 | 6.6 | 9.2 | 8.6 | 8.5 | 5.4 | 7.4 | |
| Sectoral prices | [4] | ||||||||||
| Formal sector | −2.3 | 1.7 | 0.1 | 0.1 | −13.6 | −10.7 | 0.1 | 0.1 | −10.4 | −8.0 | |
| Informal sector | −0.2 | 0.2 | −2.3 | −2.4 | −6.2 | −4.3 | −1.7 | −1.7 | −4.6 | −3.2 | |
| Employment | |||||||||||
| Formal sector | 0.6 | 2.3 | 5.2 | 5.1 | −4.2 | 6.9 | 3.6 | 3.5 | −3.2 | 5.4 | |
| Informal sector | −0.1 | 0.6 | −0.7 | −0.8 | −4.4 | −0.3 | −0.1 | −0.2 | −2.9 | 0.3 | |
| Agriculture | 0.0 | −0.4 | 0.0 | 0.1 | −1.6 | −4.2 | −0.2 | −0.1 | −1.3 | −3.3 | |
| Unemployment | [5] | 6.0 | 5.9 | 5.8 | 5.8 | 5.7 | 5.3 | 5.9 | 5.9 | 5.8 | 5.5 |
| Real wages | |||||||||||
| Formal (unskilled) | 2.8 | 2.7 | 5.2 | 5.2 | 6.3 | 6.5 | 3.8 | 3.8 | 4.7 | 4.7 | |
| Informal | 5.5 | 5.2 | 10.0 | 10.0 | 12.0 | 10.7 | 7.2 | 7.2 | 8.9 | 7.8 | |
| Skilled | 4.3 | 5.4 | 10.1 | 10.0 | −29.0 | −24.1 | 7.3 | 7.3 | −22.6 | −18.5 | |
| Fiscal adjustment | [6] | −0.35 | −0.24 | 0.47 | 0.47 | −0.64 | 0.02 | 0.03 | 0.03 | −0.74 | −0.23 |
| Private investment crowding-in | [7] | 0.52 | 0.65 | 0.98 | 0.97 | 0.25 | 0.77 | 0.70 | 0.70 | 0.19 | 0.59 |
| Real income of ‘ex ante’ poor | [8] | 5.50 | 5.40 | 10.30 | 10.30 | 18.00 | 18.10 | 7.40 | 7.40 | 14.00 | 13.90 |
| . | . | Long-run effects of increasing individual components of public investment . | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| . | . | (Increase of one percent of initial GDP) . | |||||||||
| . | . | [a] . | [b] . | [c] . | [d] . | [e] . | |||||
| . | . | Infrastructure . | Basic education . | Upper-level education . | Basic education . | Upper-level education . | |||||
| . | IRR [1] . | IRRz = 20% . | IRRb = 12% . | IRRu = 10% . | IRRb = 8% . | IRRu = 5% . | |||||
| . | [2] . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . |
| . | [3] . | . | . | . | . | . | . | . | . | . | . |
| Real GDP | 4.6 | 5.1 | 10.1 | 10.1 | 6.2 | 9.1 | 7.3 | 7.3 | 4.7 | 6.9 | |
| Real aggregate consumption | 3.8 | 4.3 | 10.3 | 10.2 | 6.5 | 9.3 | 7.1 | 7.0 | 4.6 | 6.7 | |
| Private capital stock | 3.9 | 4.8 | 10.6 | 10.5 | 2.7 | 8.4 | 7.6 | 7.5 | 2.1 | 6.4 | |
| Sectoral output | |||||||||||
| Agriculture | 4.6 | 4.1 | 9.5 | 9.6 | 3.0 | 0.4 | 6.8 | 6.8 | 2.2 | 0.2 | |
| Formal sector | 4.8 | 6.5 | 10.0 | 9.9 | 10.1 | 20.8 | 7.1 | 7.0 | 7.4 | 15.4 | |
| Informal sector | 4.6 | 5.0 | 11.3 | 11.3 | 6.6 | 9.2 | 8.6 | 8.5 | 5.4 | 7.4 | |
| Sectoral prices | [4] | ||||||||||
| Formal sector | −2.3 | 1.7 | 0.1 | 0.1 | −13.6 | −10.7 | 0.1 | 0.1 | −10.4 | −8.0 | |
| Informal sector | −0.2 | 0.2 | −2.3 | −2.4 | −6.2 | −4.3 | −1.7 | −1.7 | −4.6 | −3.2 | |
| Employment | |||||||||||
| Formal sector | 0.6 | 2.3 | 5.2 | 5.1 | −4.2 | 6.9 | 3.6 | 3.5 | −3.2 | 5.4 | |
| Informal sector | −0.1 | 0.6 | −0.7 | −0.8 | −4.4 | −0.3 | −0.1 | −0.2 | −2.9 | 0.3 | |
| Agriculture | 0.0 | −0.4 | 0.0 | 0.1 | −1.6 | −4.2 | −0.2 | −0.1 | −1.3 | −3.3 | |
| Unemployment | [5] | 6.0 | 5.9 | 5.8 | 5.8 | 5.7 | 5.3 | 5.9 | 5.9 | 5.8 | 5.5 |
| Real wages | |||||||||||
| Formal (unskilled) | 2.8 | 2.7 | 5.2 | 5.2 | 6.3 | 6.5 | 3.8 | 3.8 | 4.7 | 4.7 | |
| Informal | 5.5 | 5.2 | 10.0 | 10.0 | 12.0 | 10.7 | 7.2 | 7.2 | 8.9 | 7.8 | |
| Skilled | 4.3 | 5.4 | 10.1 | 10.0 | −29.0 | −24.1 | 7.3 | 7.3 | −22.6 | −18.5 | |
| Fiscal adjustment | [6] | −0.35 | −0.24 | 0.47 | 0.47 | −0.64 | 0.02 | 0.03 | 0.03 | −0.74 | −0.23 |
| Private investment crowding-in | [7] | 0.52 | 0.65 | 0.98 | 0.97 | 0.25 | 0.77 | 0.70 | 0.70 | 0.19 | 0.59 |
| Real income of ‘ex ante’ poor | [8] | 5.50 | 5.40 | 10.30 | 10.30 | 18.00 | 18.10 | 7.40 | 7.40 | 14.00 | 13.90 |
Notes: [1] Initial internal rates of return to components of public investment; [2] Elasticity of substitution in consumption between domestic formal sector good and imported good; [3] Unless otherwise indicated, values reflect percentage change from baseline; [4] Sectoral real exchange rates (price of import good Pm = 1; [5] Unemployment rate; [6] Tax rates and debt-to-GDP are held constant between steady states so that fiscal adjustment is measured as required change in transfer to the private sector measured as percent of baseline GDP; [7] Crowding in measured as indicated private investment per unit of public infrastructure investment; [8] Real income of ‘ex ante’ poor includes income gains from ex ante poor who become skilled or obtain high-wage jobs in the formal sector.
Source: Authors’ calculations.
| . | . | Long-run effects of increasing individual components of public investment . | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| . | . | (Increase of one percent of initial GDP) . | |||||||||
| . | . | [a] . | [b] . | [c] . | [d] . | [e] . | |||||
| . | . | Infrastructure . | Basic education . | Upper-level education . | Basic education . | Upper-level education . | |||||
| . | IRR [1] . | IRRz = 20% . | IRRb = 12% . | IRRu = 10% . | IRRb = 8% . | IRRu = 5% . | |||||
| . | [2] . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . |
| . | [3] . | . | . | . | . | . | . | . | . | . | . |
| Real GDP | 4.6 | 5.1 | 10.1 | 10.1 | 6.2 | 9.1 | 7.3 | 7.3 | 4.7 | 6.9 | |
| Real aggregate consumption | 3.8 | 4.3 | 10.3 | 10.2 | 6.5 | 9.3 | 7.1 | 7.0 | 4.6 | 6.7 | |
| Private capital stock | 3.9 | 4.8 | 10.6 | 10.5 | 2.7 | 8.4 | 7.6 | 7.5 | 2.1 | 6.4 | |
| Sectoral output | |||||||||||
| Agriculture | 4.6 | 4.1 | 9.5 | 9.6 | 3.0 | 0.4 | 6.8 | 6.8 | 2.2 | 0.2 | |
| Formal sector | 4.8 | 6.5 | 10.0 | 9.9 | 10.1 | 20.8 | 7.1 | 7.0 | 7.4 | 15.4 | |
| Informal sector | 4.6 | 5.0 | 11.3 | 11.3 | 6.6 | 9.2 | 8.6 | 8.5 | 5.4 | 7.4 | |
| Sectoral prices | [4] | ||||||||||
| Formal sector | −2.3 | 1.7 | 0.1 | 0.1 | −13.6 | −10.7 | 0.1 | 0.1 | −10.4 | −8.0 | |
| Informal sector | −0.2 | 0.2 | −2.3 | −2.4 | −6.2 | −4.3 | −1.7 | −1.7 | −4.6 | −3.2 | |
| Employment | |||||||||||
| Formal sector | 0.6 | 2.3 | 5.2 | 5.1 | −4.2 | 6.9 | 3.6 | 3.5 | −3.2 | 5.4 | |
| Informal sector | −0.1 | 0.6 | −0.7 | −0.8 | −4.4 | −0.3 | −0.1 | −0.2 | −2.9 | 0.3 | |
| Agriculture | 0.0 | −0.4 | 0.0 | 0.1 | −1.6 | −4.2 | −0.2 | −0.1 | −1.3 | −3.3 | |
| Unemployment | [5] | 6.0 | 5.9 | 5.8 | 5.8 | 5.7 | 5.3 | 5.9 | 5.9 | 5.8 | 5.5 |
| Real wages | |||||||||||
| Formal (unskilled) | 2.8 | 2.7 | 5.2 | 5.2 | 6.3 | 6.5 | 3.8 | 3.8 | 4.7 | 4.7 | |
| Informal | 5.5 | 5.2 | 10.0 | 10.0 | 12.0 | 10.7 | 7.2 | 7.2 | 8.9 | 7.8 | |
| Skilled | 4.3 | 5.4 | 10.1 | 10.0 | −29.0 | −24.1 | 7.3 | 7.3 | −22.6 | −18.5 | |
| Fiscal adjustment | [6] | −0.35 | −0.24 | 0.47 | 0.47 | −0.64 | 0.02 | 0.03 | 0.03 | −0.74 | −0.23 |
| Private investment crowding-in | [7] | 0.52 | 0.65 | 0.98 | 0.97 | 0.25 | 0.77 | 0.70 | 0.70 | 0.19 | 0.59 |
| Real income of ‘ex ante’ poor | [8] | 5.50 | 5.40 | 10.30 | 10.30 | 18.00 | 18.10 | 7.40 | 7.40 | 14.00 | 13.90 |
| . | . | Long-run effects of increasing individual components of public investment . | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| . | . | (Increase of one percent of initial GDP) . | |||||||||
| . | . | [a] . | [b] . | [c] . | [d] . | [e] . | |||||
| . | . | Infrastructure . | Basic education . | Upper-level education . | Basic education . | Upper-level education . | |||||
| . | IRR [1] . | IRRz = 20% . | IRRb = 12% . | IRRu = 10% . | IRRb = 8% . | IRRu = 5% . | |||||
| . | [2] . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . | ε3 = 0.5 . | ε3 = 5 . |
| . | [3] . | . | . | . | . | . | . | . | . | . | . |
| Real GDP | 4.6 | 5.1 | 10.1 | 10.1 | 6.2 | 9.1 | 7.3 | 7.3 | 4.7 | 6.9 | |
| Real aggregate consumption | 3.8 | 4.3 | 10.3 | 10.2 | 6.5 | 9.3 | 7.1 | 7.0 | 4.6 | 6.7 | |
| Private capital stock | 3.9 | 4.8 | 10.6 | 10.5 | 2.7 | 8.4 | 7.6 | 7.5 | 2.1 | 6.4 | |
| Sectoral output | |||||||||||
| Agriculture | 4.6 | 4.1 | 9.5 | 9.6 | 3.0 | 0.4 | 6.8 | 6.8 | 2.2 | 0.2 | |
| Formal sector | 4.8 | 6.5 | 10.0 | 9.9 | 10.1 | 20.8 | 7.1 | 7.0 | 7.4 | 15.4 | |
| Informal sector | 4.6 | 5.0 | 11.3 | 11.3 | 6.6 | 9.2 | 8.6 | 8.5 | 5.4 | 7.4 | |
| Sectoral prices | [4] | ||||||||||
| Formal sector | −2.3 | 1.7 | 0.1 | 0.1 | −13.6 | −10.7 | 0.1 | 0.1 | −10.4 | −8.0 | |
| Informal sector | −0.2 | 0.2 | −2.3 | −2.4 | −6.2 | −4.3 | −1.7 | −1.7 | −4.6 | −3.2 | |
| Employment | |||||||||||
| Formal sector | 0.6 | 2.3 | 5.2 | 5.1 | −4.2 | 6.9 | 3.6 | 3.5 | −3.2 | 5.4 | |
| Informal sector | −0.1 | 0.6 | −0.7 | −0.8 | −4.4 | −0.3 | −0.1 | −0.2 | −2.9 | 0.3 | |
| Agriculture | 0.0 | −0.4 | 0.0 | 0.1 | −1.6 | −4.2 | −0.2 | −0.1 | −1.3 | −3.3 | |
| Unemployment | [5] | 6.0 | 5.9 | 5.8 | 5.8 | 5.7 | 5.3 | 5.9 | 5.9 | 5.8 | 5.5 |
| Real wages | |||||||||||
| Formal (unskilled) | 2.8 | 2.7 | 5.2 | 5.2 | 6.3 | 6.5 | 3.8 | 3.8 | 4.7 | 4.7 | |
| Informal | 5.5 | 5.2 | 10.0 | 10.0 | 12.0 | 10.7 | 7.2 | 7.2 | 8.9 | 7.8 | |
| Skilled | 4.3 | 5.4 | 10.1 | 10.0 | −29.0 | −24.1 | 7.3 | 7.3 | −22.6 | −18.5 | |
| Fiscal adjustment | [6] | −0.35 | −0.24 | 0.47 | 0.47 | −0.64 | 0.02 | 0.03 | 0.03 | −0.74 | −0.23 |
| Private investment crowding-in | [7] | 0.52 | 0.65 | 0.98 | 0.97 | 0.25 | 0.77 | 0.70 | 0.70 | 0.19 | 0.59 |
| Real income of ‘ex ante’ poor | [8] | 5.50 | 5.40 | 10.30 | 10.30 | 18.00 | 18.10 | 7.40 | 7.40 | 14.00 | 13.90 |
Notes: [1] Initial internal rates of return to components of public investment; [2] Elasticity of substitution in consumption between domestic formal sector good and imported good; [3] Unless otherwise indicated, values reflect percentage change from baseline; [4] Sectoral real exchange rates (price of import good Pm = 1; [5] Unemployment rate; [6] Tax rates and debt-to-GDP are held constant between steady states so that fiscal adjustment is measured as required change in transfer to the private sector measured as percent of baseline GDP; [7] Crowding in measured as indicated private investment per unit of public infrastructure investment; [8] Real income of ‘ex ante’ poor includes income gains from ex ante poor who become skilled or obtain high-wage jobs in the formal sector.
Source: Authors’ calculations.
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