An Active Public Investment Rule and the Downsizing Experience in the US: 1960-2000
AbstractWe use a simple growth model with public capital to examine the evolution of the US macroeconomy and to discuss the implications of the public infrastructure decline for the productivity slowdown over the last four decades. The main difference of the model to other papers in the related literature is that public investment is actively managed as a non-linear function of the state of the economy, and is not a constant fraction of output in every period. The active management policy delivers transition dynamics that reproduce the public capital downsizing episode, but that accounts for only a minor fraction of the observed productivity slowdown. However, taking into consideration higher rates of returns to public capital or the reallocation of public resources from productive to unproductive expenditures, which is consistent with the US experience in the 70s and 80s, the model simulation accounts for most of the observed productivity slowdown.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.
Volume (Year): topics.5 (2005)
Issue (Month): 1 ()
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Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
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- Marrero, Gustavo A. & Novales, Alfonso, 2007. "Income taxes, public investment and welfare in a growing economy," Journal of Economic Dynamics and Control, Elsevier, vol. 31(10), pages 3348-3369, October.
- Marrero, Gustavo A., 2008.
"Revisiting The Optimal Stationary Public Investment Policy In Endogenous Growth Economies,"
Cambridge University Press, vol. 12(02), pages 172-194, April.
- Gustavo A. Marrero, 2005. "Revisiting the optimal stationary public investment policy in endogenous growth economies," Documentos del Instituto Complutense de AnÃ¡lisis EconÃ³mico 0509, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
- Gustavo Marrero, 2010. "Tax-mix, public spending composition and growth," Journal of Economics, Springer, vol. 99(1), pages 29-51, February.
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