Public Investment Quality and Sovereign Risk
The DEMS Economics Seminar series is proud to host
Ugo Panizza
(Geneva Graduate Institute & CEPR)
with A. Adarov
ABSTRACT
This paper introduces a new index measuring the quality of public investment covering 120 economies over 2000–2021. It shows that scaling up public investment reduces sovereign risk in countries with high-quality public investment but increases sovereign risk when public investment quality is low. We find that this relationship is especially pronounced in sub-investment grade countries and that the results are not driven by the possible correlation between public investment quality and overall institutional quality. We also show that scaling up public investment when its quality is high does not undermine debt sustainability.
The seminar will be in presence, Seminar Room 2104, Building U7-2nd floor