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The “Public Capital Hypothesis” : The Case of Germany


  • Klaus CONRAD

    (Universität Mannheim)

  • Helmut SEITZ

    (Universität Mannheim)


According to the "public capital hypothesis" public investment crowds in private investment by increasing the rate of return to private capital. The present paper uses an extended cost function with public capital included as an unpaid fixed factor of production to ex- amine the impact public capital has on the private economy. Using a panel of four highly aggregated sectors of the West German Economy, it is shown, that the provision of public capital raises the demand for private capital, as suggested by the public capital hypothesis. In addition, it is shown that public infrastructure capital contributes to the productivity of the private economy.

Suggested Citation

  • Klaus CONRAD & Helmut SEITZ, 1992. "The “Public Capital Hypothesis” : The Case of Germany," Discussion Papers (REL - Recherches Economiques de Louvain) 1992034, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvre:1992034

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    References listed on IDEAS

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    Cited by:

    1. Conrad, Klaus & Seitz, Helmut, 1997. "Infrastructure provision and international market share rivalry," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 715-734, November.
    2. Barabas, György & Kitlinski, Tobias & Schmidt, Christoph M. & Schmidt, Torsten & Siemers, Lars-H. & Brilon, Werner, 2010. "Verkehrsinfrastrukturinvestitionen: Wachstumsaspekte im Rahmen einer gestaltenden Finanzpolitik. Endbericht - Januar 2010. Forschungsprojekt im Auftrag des Bundesministeriums der Finanzen. Projektnumm," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 72601.
    3. Bendoma, Marius & Messiné Essomba, Cyrille, 2017. "Investissement public et croissance économique au Cameroun
      [Public Investment and Economic Growth in Cameroon]
      ," MPRA Paper 81794, University Library of Munich, Germany.
    4. Pierre-Yves Hénin & Pierre Ralle, 1993. "Les nouvelles théories de la croissance : quelques apports pour la politique économique," Revue Économique, Programme National Persée, vol. 44(1), pages 75-100.
    5. Marie-Ange VEGANZONES-VAROUDAKIS, 2000. "Infrastructures, investissement et croissance : un bilan de dix années de recherches," Working Papers 200007, CERDI.
    6. Georg Erber, 1995. "Public Infrastructure, Productivity and Competitiveness: Analysis of Relative Differences and Impacts with Regard to U.S. and German Industries," Discussion Papers of DIW Berlin 115, DIW Berlin, German Institute for Economic Research.
    7. Palakiyèm Kpemoua, 2016. "Analyse de l'impact des infrastructures de transport sur la croissance économique du Togo," Working Papers hal-01389698, HAL.

    More about this item

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H4 - Public Economics - - Publicly Provided Goods


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