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The public investment rule in a simple endogenous endogenous growth model with public capital: active or pasive?

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Marrero, Gustavo A. (2003) The public investment rule in a simple endogenous endogenous growth model with public capital: active or pasive? [ UCM. Instituto Complutense de Análisis Económico. Documentos de trabajo; nº 0401, 2004, ]

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Resumen

In dynamic settings with public capital, it is common to assume that the government
claims a constant fraction of public investment to total output each period, which is
clearly a restrictive assumption. The goal of the paper is twofold: first, to find out a more
reasonable rule for public investment, consistent with US data, than the constant-ratio
rule; second, to analyze the impact of that rule on welfare and judge the public investment
downsizing process held in US since the end of the sixties. Calibrating for US, the model
simulation captures the public investment downsizing process held during 1960-2001, as
well as the post-1970 slowdown in private factors productivity. Downsizing would be
optimal whenever the public capital elasticity is approximately smaller than 0.09, a lower
level than the general consensus in the literature. Thus, it is more likely that our result
be consistent to Aschauer (1989) and Munnell (1990), which put forth that policymakers
would have reduced the stock of public capital below its optimum level along this time.


Tipo de documento:Documento de trabajo o Informe técnico
Información Adicional:

JEL Classification: E0, E6, O4.

Palabras clave:Public investment rule, Policy coordination, Transitional dynamics, Endogenous growth, Public capital elasticity
Materias:Ciencias Sociales > Economía > Economía pública
Título de serie o colección:UCM. Instituto Complutense de Análisis Económico. Documentos de trabajo
Volumen:2004
Número:0401
Código ID:7914
Depositado:26 May 2008
Última Modificación:06 Feb 2014 07:56

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