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Is Government Investment Underprovided in Europe? Evidence from a Panel of Fifteen Countries




This paper estimates the productivity of government capital for a panel of fifteen European countries in the 1960-1992 period, and tests whether government investment is optimally provided. The empirical results support the following conclusions: (i) When time effects are included in the regression the estimated marginal product of government capital is not statistically significantly different from zero; (ii) The hypothesis that the marginal products of private and government capital are equal cannot be rejected. Therefore, the evidence of this paper cannot reject the Panglossian view that government investment is neither underprovided nor overprovided in the fifteen countries of our sample.

Suggested Citation

  • Karras, Georgios, 1997. "Is Government Investment Underprovided in Europe? Evidence from a Panel of Fifteen Countries," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 50(2), pages 223-235.
  • Handle: RePEc:ris:ecoint:0338

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    References listed on IDEAS

    1. Halushka, Andrij & Savluk, Sergei & Wörgötter, Andreas, 1994. "Ukrainian Hyperinflation: History, Analysis, Recommendations," East European Series 10, Institute for Advanced Studies.
    2. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    4. Cukierman, Alex & Edwards, Sebastian & Tabellini, Guido, 1992. "Seigniorage and Political Instability," American Economic Review, American Economic Association, vol. 82(3), pages 537-555, June.
    5. James G. MacKinnon, 1990. "Critical Values for Cointegration Tests," Working Papers 1227, Queen's University, Department of Economics.
    6. Stock, James H, 1987. "Asymptotic Properties of Least Squares Estimators of Cointegrating Vectors," Econometrica, Econometric Society, vol. 55(5), pages 1035-1056, September.
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    Cited by:

    1. Óscar Bajo Rubio & Carmen Díaz Roldán & M.a Dolores Montávez Garcés, "undated". "Optimal Endowments Of Public Investment: An Empirical Analysis For The Spanish Regions," Working Papers 20-02 Classification-JEL , Instituto de Estudios Fiscales.
    2. Boopen Seetanah, 2011. "Optimal endowments of transport investment: an empirical analysis for mauritius," Empirical Economics, Springer, vol. 40(3), pages 827-838, May.
    3. Sklias, Pantelis & Tsampra, Maria, 2011. "Assessing regional integration and business potential in the Western Balkans," MPRA Paper 36341, University Library of Munich, Germany.

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