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An Analytic Estimation of the Multiplier Effect of Public Consumption in the Dominican Republic: 2007-2012

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  • Penson, Enrique

Abstract

This study estimates the multiplier effect of public consumption in the Dominican Republic via an analytic methodology that works with input-output tables using data on the years 2007-2012. This study finds that the public sector has an employment multiplier of 1.5, which means that for every 10 jobs that are created within the public sector because of public consumption, 5 jobs are created within the private sector. Also, the study finds that around 20\% of imports are directly and indirectly caused by the effect of public consumption. The proportion of GDP explained by public consumption is also estimated around 20\%. However, when one takes into account (and discounts) the effect that the money directed to public spending would've had if it had been spent by the private sector on consumption and investment, the impact is reduced by at least a quarter.

Suggested Citation

  • Penson, Enrique, 2017. "An Analytic Estimation of the Multiplier Effect of Public Consumption in the Dominican Republic: 2007-2012," MPRA Paper 88592, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88592
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    References listed on IDEAS

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    1. Thomas Warmedinger & Cristina Checherita-Westphal & Pablo Hernández de Cos, 2015. "Fiscal Multipliers and Beyond," Hacienda Pública Española / Review of Public Economics, IEF, vol. 215(4), pages 139-168, December.
    2. Jonathan A. Parker, 2011. "On Measuring the Effects of Fiscal Policy in Recessions," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 703-718, September.
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    4. Sebastian Gechert & Henner Will, 2012. "Fiscal Multipliers: A Meta Regression Analysis," IMK Working Paper 97-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    5. Benavides, Julian & Berggrun, Luis & Perafan, Hector, 2016. "Dividend payout policies: Evidence from Latin America," Finance Research Letters, Elsevier, vol. 17(C), pages 197-210.
    6. repec:ecb:ecbops:2011162 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dominican Republic; Public Consumption; Input-Output Models; Multiplier Effect;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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