Rethinking nonlinear fiscal multipliers in Asia: Efficiency, infrastructure, and institutions

This paper analyzes the impact of public investment shocks on economic growth in emerging and developing economies (EMDEs), with a focus on Asia. Using a novel approach to identify investment shocks and employing the local projection method, we find that public investment significantly enhances growth, particularly in countries with high public investment efficiency, low infrastructure quality, and low corruption levels. The results underscore the importance of efficient resource allocation and strong institutions in maximizing the effectiveness of public spending, demonstrating its potential to bolster overall economic growth in EMDEs.