IESET.
Hypotheses·fiscal·public_spending_composition_growth

Public investment in basic infrastructure (transport, energy, water, sanitation) has strong catch-up returns to real GDP per capita growth in developing and emerging economies, while persistent public transfers and subsidies have weaker or insignificant long-run growth effects, in a broad-country panel 1980-2020.

The directional claim is that a 1-percentage- point increase in public-investment share of GDP predicts a 0.1-0.3 percentage point increase in annual growth, while an equivalent increase in transfers/subsidies share predicts no significant growth effect or a negative effect, controlling for initial income, institutions, and debt.

PARTIALengine/runs/public_spending_composition_growth

PARTIAL — coef=+2.273e-17, p=0.0315; effect magnitude effectively zero

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The evidence is suggestive but not decisive. coef=+2.273e-17, p=0.0315; effect magnitude effectively zero

why it matters

This matters because fiscal claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 66 country or place units from 1980 to 2020, using a panel fe decomposition design, with fixed effects for country and year.

what was measured
What changed
  • Public investment share income
  • Transfers and subsidies share income
Possible pathway
  • Infrastructure quality index
  • Private investment share
What we checked
  • Real income per capita growth
  • Total factor productivity growth
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

8 input datasets, 2 unresolved missing series, provenance status: incomplete.

Results

engine/runs/public_spending_composition_growth
1007550250198020002020ARGAUSAUTBELBGDBOLBRA
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show real_gdp_per_capita_growth across 66 sampled countries over 1980–2020.
The shapes above are stylised — none of the lines are real data.
Placeholder for public_spending_composition_growth. Published chart will be generated from engine/runs/public_spending_composition_growth/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:52:32Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

Public investment in basic infrastructure (transport, energy, water, sanitation) has strong catch-up returns to real GDP per capita growth in developing and emerging economies, while persistent public transfers and subsidies have weaker or insignificant long-run growth effects, in a broad-country panel 1980-2020. The directional claim is that a 1-percentage- point increase in public-investment share of GDP predicts a 0.1-0.3 percentage point increase in annual growth, while an equivalent increase in transfers/subsidies share predicts no significant growth effect or a negative effect, controlling for initial income, institutions, and debt.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

SUPPORTED if β1 (public investment) is positive and significant at p<0.10 while β2 (transfers/subsidies) is insignificant or negative. PARTIAL if both are positive but β1 > β2. REFUTED if β2 is positive and significantly larger than β1, or if both are insignificant. INFORMATIVE: the public-investment coefficient should be larger and more significant in the catch-up subsample than in the frontier subsample; if the opposite holds, the result is a frontier-specific anomaly.

formal test & threshold
test:      panel_fe_decomposition_public_investment_vs_transfers_growth
threshold: β_public_investment > 0 at p<=0.10  AND β_transfers_subsidies p >= 0.10 or coefficient <= 0  AND Catch-up subsample β_public_investment >= frontier subsample β_public_investment.

Method

Template
panel_fe_decomposition
Fixed effects
country, year
Clustering
country
Sample
66 countries · 1980 – 2020
Evidence type
associational

Two-way FE panel with decomposition: growth = β0 + β1*public_investment + β2*transfers_subsidies + controls + FE. Mechanism decomposition via infrastructure quality and private investment channels. Robustness: (1) 5-year non-overlapping averages to capture medium-run effects; (2) subsample by income level (catch-up vs frontier); (3) IV for public investment using lagged public investment and electoral-cycle timing (political budget cycles). Separate catch-up and frontier specifications pre-registered.

Data

VariableSourceTransform
real_gdp_per_capita_growth
outcome
world_bank_wdi:NY.GDP.PCAP.KDtier 2
annual_log_change
total_factor_productivity_growth
outcome
pwt:rtfpnatier 3
annual_log_change
public_investment_share_gdp
treatment
world_bank_wdi:NE.GDI.FTOT.ZStier 2
level
transfers_and_subsidies_share_gdp
treatment
imf_gfs:transfers_and_subsidiestier 5
level
infrastructure_quality_index
channel
wef_gci:infrastructure_qualitytier 5
level
private_investment_share
channel
world_bank_wdi:NE.GDI.TOTL.ZStier 2
level
initial_log_gdp_per_capita
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
institutional_quality
control
wgi:RL.ESTtier 4
level
debt_to_gdp
control
imf:GGXWDG_NGDPtier 2
level
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
population_growth
control
world_bank_wdi:SP.POP.GROWtier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — public_spending_composition_growth

Verdict: PARTIAL — coef=+2.273e-17, p=0.0315; effect magnitude effectively zero

Pre-registration

  • Claim: Public investment in basic infrastructure (transport, energy, water, sanitation) has strong catch-up returns to real GDP per capita growth in developing and emerging economies, while persistent public transfers and subsidies have weaker or insignificant long-run growth effects, in a broad-country panel 1980-2020. The directional claim is that a 1-percentage- point increase in public-investment share of GDP predicts a 0.1-0.3 percentage point increase in annual growth, while an equivalent increase in transfers/subsidies share predicts no significant growth effect or a negative effect, controlling for initial income, institutions, and debt.
  • Falsification rule: SUPPORTED if β1 (public investment) is positive and significant at p<0.10 while β2 (transfers/subsidies) is insignificant or negative. PARTIAL if both are positive but β1 > β2. REFUTED if β2 is positive and significantly larger than β1, or if both are insignificant. INFORMATIVE: the public-investment coefficient should be larger and more significant in the catch-up subsample than in the frontier subsample; if the opposite holds, the result is a frontier-specific anomaly.
  • Falsification test: panel_fe_decomposition_public_investment_vs_transfers_growth

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): +2.273e-17
  • Std error: 1.056e-17
  • p-value: 0.0315
  • Observations: 1152, countries: 54
  • Within R²: 1
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • world_bank_wdi:NY.GDP.PCAP.KD → real_gdp_per_capita_growth (outcome, publisher=world_bank_wdi, n=12104)
  • pwt:rtfpna → total_factor_productivity_growth (outcome, publisher=pwt, n=6407)
  • world_bank_wdi:NE.GDI.FTOT.ZS → public_investment_share_gdp (treatment, publisher=world_bank_wdi, n=9870)
  • world_bank_wdi:NE.GDI.TOTL.ZS → private_investment_share (decomposition_channels, publisher=world_bank_wdi, n=10428)
  • world_bank_wdi:NY.GDP.PCAP.KD → initial_log_gdp_per_capita (controls, publisher=world_bank_wdi, n=12104)
  • wgi:RL.EST → institutional_quality (controls, publisher=wgi, n=5296)
  • imf_weo:GGXWDG_NGDP → debt_to_gdp (controls, publisher=imf, n=8113)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • world_bank_wdi:SP.POP.GROW → population_growth (controls, publisher=world_bank_wdi, n=16672)

Variables missing data

  • imf_gfs:transfers_and_subsidies (treatment, name=transfers_and_subsidies_share_gdp) — vintage not on disk
  • wef_gci:infrastructure_quality (decomposition_channels, name=infrastructure_quality_index) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:52:32+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Data readiness: - WDI public fixed capital formation, total investment, GDP pc (ready) - IMF GFS transfers and subsidies (pending; constructed fallback flagged) - WGI RL.EST (ready) - IMF WEO debt (ready) - PWT rtfpna (ready) - WEF GCI infrastructure quality (pending)

Authored framework. Read the transparency note.