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Characterizing the Optimal Composition of Government Expenditures

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Author Info
Rafaela Pérez Sánchez () (Universidad Complutense de Madrid)
Abstract

This paper extends the neoclassical growth model with productive public capital by including an infrastructure efficiency index, which is assumed to depend on a public choice variable, in particular, the share of public spending allocated to productive public consumption. A golden rule for the allocation of public expenditure between productive consumption and investment is specified. Under this framework, the observed path for the stock of infrastructures and the proposed efficiency index in the US economy during the last fifty years have been close to optimal: a lower stock of infrastructures has been accumulated, but it has been used more efficiently.

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Paper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/81.

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Length: 30 pages
Date of creation: 2004
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Handle: RePEc:cea:doctra:e2004_81

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Related research
Keywords: Public Expenditure Composition Public Investment Public Consumption Nominal and Effective Infrastructures Infrastructures Efficiency Index

Find related papers by JEL classification:
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
H40 - Public Economics - - Publicly Provided Goods - - - General
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

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    Other versions:
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    Other versions:
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    Other versions:
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  11. Lee, Jisoon, 1992. "Optimal size and composition of government spending," Journal of the Japanese and International Economies, Elsevier, vol. 6(4), pages 423-439, December. [Downloadable!] (restricted)
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  17. Judd, Kenneth L., 1999. "Optimal taxation and spending in general competitive growth models," Journal of Public Economics, Elsevier, vol. 71(1), pages 1-26, January. [Downloadable!] (restricted)
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