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.
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Volume (Year): 50 (1997)
Issue (Month): 2 ()
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