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Public capital maintenance and congestion: Long-run growth and fiscal policies

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  • Dioikitopoulos, Evangelos V.
  • Kalyvitis, Sarantis

Abstract

In this paper we study an endogenous growth model, in which public maintenance expenditures affect the depreciation rate of public capital and the latter is subject to congestion. We find that economies with low congestion in public infrastructure will require a threshold level of public capital maintenance for ongoing growth. We also examine the fiscal implications of public capital maintenance policies and we find that the composition of public capital expenditures under congestion is a crucial determinant of optimal and growth-maximizing fiscal policies. The government can affect the return of public capital by re-allocating public expenditures between 'new' public investment and maintenance and hence avoid excessive taxation that is required under increasing congestion.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 32 (2008)
Issue (Month): 12 (December)
Pages: 3760-3779

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Handle: RePEc:eee:dyncon:v:32:y:2008:i:12:p:3760-3779

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Web page: http://www.elsevier.com/locate/jedc

Related research

Keywords: Public capital maintenance Congestion Optimal fiscal policies;

References

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Citations

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Cited by:
  1. Sarantis Kalyvitis & Eugenia Vella, 2011. "Public Capital Maintenance, Decentralization, and US Productivity Growth," Public Finance Review, , vol. 39(6), pages 784-809, November.
  2. Lai, Ching-Chong & Liao, Chih-Hsing, 2012. "Optimal nonlinear income taxation with productive government expenditure," International Review of Economics & Finance, Elsevier, vol. 22(1), pages 66-77.

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