Public Providers, versus Private Providers, of Public Goods: A General Equilibrium Study of the Role of the State
This paper studies the difference between public production and public finance of public goods in a dynamic general equilibrium setup. By public finance, we mean that the public good is produced by private providers with the government financing their costs. When the model is calibrated to match fiscal data from the UK economy, the main result is that, ceteris paribus, a switch from public production to public finance can have substantial aggregate and distributional implications. Public providers cannot beat private providers in terms of aggregate efficiency. We finally design a transfer scheme that can make a switch to private provision welfare improving for all agents including public employees.
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- Gonzalo Fernández-de-Córdoba & Javier J. Pérez & José L. Torres, 2009.
"Public and private sector wages interactions in a general equilibrium model,"
Banco de Espa�a Working Papers
0924, Banco de Espa�a.
- Gonzalo Fernández-de-Córdoba & Javier Pérez & José Torres, 2012. "Public and private sector wages interactions in a general equilibrium model," Public Choice, Springer, vol. 150(1), pages 309-326, January.
- Fernàndez-de-Córdoba, Gonzalo & Pérez, Javier J. & Torres, José L., 2009. "Public and private sector wages interactions in a general equilibrium model," Working Paper Series 1099, European Central Bank.
- Teresa Garcia-Milà & Albert Marcet & Eva Ventura, 1995.
"Supply side interventions and redistribution,"
Economics Working Papers
115, Department of Economics and Business, Universitat Pompeu Fabra.
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