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

Enrique Penson

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Dominican Republic; Public Consumption; Input-Output Models; Multiplier Effect (search for similar items in EconPapers)
JEL-codes: C67 D57 E62 (search for similar items in EconPapers)
Date: 2017-12-11
New Economics Papers: this item is included in nep-mac
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