Public Capital and Economic Growth: Issues of Quantity, Finance, and Efficiency
AbstractOver the past decade, a large body of theoretical and empirical research has considered the importance of the quantity of public capital for economic growth. For the most part, the empirical results point to a positive role for public capital in determining steady state levels of output per capita and transitional growth rates. At the same time, other work has pointed out the importance of the means of financing government spending for economic growth, with the empirical results indicating a negative influence of higher government spending (proxying for a higher rate of taxation of private sector economic activities) on economic growth. Finally, there is a budding literature on the importance of the effectiveness, or efficiency, of public capital to the growth process; the limited results in the literature suggest that the effectiveness of use of the public capital stock has a meaningful positive influence on growth. This paper develops a common framework to investigate the importance of all three of these aspects of the provision of public capital for growth in output per worker. The paper includes a simple extension of the neoclassical growth model of Solow (1956) and Swan (1956), and a consideration of the relative importance of the three aspects of public capital: "how much you have," "how you pay for it," and how you use it."
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Economic Development and Cultural Change.
Volume (Year): 48 (2000)
Issue (Month): 2 (January)
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Web page: http://www.journals.uchicago.edu/EDCC/
Other versions of this item:
- David Alan Aschauer, 1998. "Public Capital and Economic Growth: Issues of Quantity, Finance, and Efficiency," Economics Working Paper Archive wp_233, Levy Economics Institute, The.
- David Aschauer, 1998. "Public Capital and Economic Growth: Issues of Quantity, Finance, and Efficiency," Macroeconomics 9805016, EconWPA.
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