Macroeconomic rates of return of public and private investment: crowding-in and crowding-out effects

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Macroeconomic rates of return of public and private investment: crowding-in and crowding-out effects

Author Info

António Afonso () (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
Miguel St. Aubyn () (ISEG/TULisbon, Technical University of Lisbon, Department of Economics, UECE, Research Unit on Complexity and Economics, R. Miguel Lupi 20, 1249-078 Lisbon, Portugal.)

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Abstract

Using annual data from 14 European Union countries, plus Canada, Japan and the United States, we evaluate the macroeconomic effects of public and private investment through VAR analysis. From impulse response functions, we are able to assess the extent of crowding-in or crowding-out of both components of investment. We also compute the associated macroeconomic rates of return of public and private investment for each country. The results point mostly to the existence of positive effects of public investment and private investment on output. On the other hand, the crowding-in effects of public investment on private investment vary across countries, while the crowding-in effect of private investment on public investment is more generalised. JEL Classification: C32, E22, E62.

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Paper provided by European Central Bank in its series Working Paper Series with number 864.

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Length: 56 pages
Date of creation: Feb 2008
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Handle: RePEc:ecb:ecbwps:20080864

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Paper
- António Afonso & Miguel St.Aubyn, 2008. "Macroeconomic Rates of Return of Public and Private Investment: Crowding-in and Crowding-out Effects," Working Papers 2008/06, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-03-01 (All new papers)
NEP-CBA-2008-03-01 (Central Banking)
NEP-MAC-2008-03-01 (Macroeconomics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March. [Downloadable!] (restricted)
Other versions:
- David Aschauer, 1988. "Is public expenditure productive?," Staff Memoranda 88-7, Federal Reserve Bank of Chicago.
Argimon, Isabel & Gonzalez-Paramo, Jose M & Roldan, Jose M, 1997. "Evidence of Public Spending Crowding-Out from a Panel of OECD Countries," Applied Economics, Taylor and Francis Journals, vol. 29(8), pages 1001-10, August. [Downloadable!] (restricted)
Yang Zou, 2006. "Empirical studies on the relationship between public and private investment and GDP growth," Applied Economics, Taylor and Francis Journals, vol. 38(11), pages 1259-1270, June. [Downloadable!] (restricted)
Christophe Kamps, 2004. "The Dynamic Effects of Public Capital: VAR Evidence for 22 OECD Countries," Kiel Working Papers 1224, Kiel Institute for the World Economy. [Downloadable!]
Other versions:
- Christophe Kamps, 2005. "The Dynamic Effects of Public Capital: VAR Evidence for 22 OECD Countries," International Tax and Public Finance, Springer, vol. 12(4), pages 533-558, August. [Downloadable!] (restricted)
Aschauer, David Alan, 1989. "Does public capital crowd out private capital?," Journal of Monetary Economics, Elsevier, vol. 24(2), pages 171-188, September. [Downloadable!] (restricted)
Other versions:
- David Aschauer, 1988. "Does public capital crowd out private capital?," Staff Memoranda 88-10, Federal Reserve Bank of Chicago.

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

António Afonso & Juan González Alegre, 2007. "Economic Growth and Budgetary Components: a Panel Assessment for the EU," Working Papers 2007/29, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
Other versions:
- António Afonso & Juan González Alegre, 2008. "Economic growth and budgetary components - a panel assessment for the EU," Working Paper Series 848, European Central Bank. [Downloadable!]

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