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This study investigates the role of public infrastructure investment on economic growth and poverty reduction in the Philippines. Using dynamic CGE modeling and microsimulation techniques, the researchers find that the positive supply side effects of higher public investment expenditure manifest over time, through higher capital accumulation and improved productivity. Their findings reveal that higher public infrastructure investment not only positively impacts real GDP, but also reduces poverty and inequality in the short and long run. Based on the simulations' results, the researchers also conclude that international financing is a better alternative than tax financing when considered in terms of such investments' ability to improve the economy’s physical infrastructure, in order to create job opportunities, improve productivity and complement its social protection measures.

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