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Determinants of private investment in the countries of the Pacific Alliance

Abstract:

This article seeks to empirical evidence about whether an increase in taxes, public spending and in general, a state very interventionist encourages or discourages private investment in developing countries that make up the Pacific Alliance. We did an analysis of the four countries and the results from our estimated elasticities show evidence consistent with three scenarios: (1) that the tax pressure (taxes on income and consumption) has significant effects on private investment; (2) that public investment has an effect of crowding out private investment; (3) and that in order to stimulate private investment, it is preferred that the government is little interventionist.