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

Penson, Enrique (2017): An Analytic Estimation of the Multiplier Effect of Public Consumption in the Dominican Republic: 2007-2012.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Dominican Republic; Public Consumption; Input-Output Models; Multiplier Effect
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C67 - Input-Output Models; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D57 - Input-Output Tables and Analysis; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy

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