The “Public Capital Hypothesis” : The Case of Germany
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.
|Date of creation:||01 Sep 1992|
|Date of revision:|
|Contact details of provider:|| Postal: Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10473945
Web page: http://www.uclouvain.be/ires
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ctl:louvre:1992034. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sebastien SCHILLINGS)
If references are entirely missing, you can add them using this form.