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Does Government Public Capital Expenditure Matter?: Evidence for Canada

Author

Listed:
  • Dadgostar, Bahram

    (Lakehead University)

  • Mirabelli, Frank

    (Lakehead University)

Abstract

Does the provision of Canadian government capital expenditures and government deficits displace private economic activity? In the U.S., Erenburg (1993) found that private sector investment spending is enhanced by expected increases in public spending on infrastructure, while also showing that deficit spending has no significant effect on private investment. There is no empirical study to date that addresses the relationship between government capital investment and government debt on private capital investment in Canada. Thus, the objective of this study is to determine the effect of government investment expenditure and government deficit spending on private investment in Canada. The results of this study indicate that private sector investment is positively affected by public sector investment while no significant relationship was found between Canadian government deficit and private sector investment.

Suggested Citation

  • Dadgostar, Bahram & Mirabelli, Frank, 1998. "Does Government Public Capital Expenditure Matter?: Evidence for Canada," Economic Analysis and Policy, Elsevier, vol. 28(2), pages 199-211, September.
    • Handle: RePEc:eee:ecanpo:v:28:y:1998:i:2:p:199-211
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    Cited by:

    1. Trofimov, Ivan D., 2020. "Public capital and productive economy profits: evidence from OECD economies," MPRA Paper 106848, University Library of Munich, Germany.

    More about this item

    Keywords

    Capital Expenditure; Capital; Debt; Deficit; Expenditure; Infrastructure; Investment; Public Capital;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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