This paper looks for empirical evidence to show if a very interventionist government stimulates or not private investment in Latin America. Using the same model as Caballero-Urdiales y López-Gallardo (2012), we extend their analysis from five Latin-American countries to all Latin America. The results from our estimated elasticities show evidence in support of three hypothesis: (1) that tax burden (taxes on income and consumption) has significant effects on privateinvestment; (2) that public investment has a crowding out effect with private investment; (3) and that in order to stimulate private investment, the government should have very little intervention.
Private investment, gross domestic produc, public investment, income tax, value added tax
Brito-Gaona, L. F., & Iglesias, E. M. (2017). Private investment, government expenditure and tax burden in Latin America. Estudios De Economía, 44(2), 131–156. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/47521