Public investment and the EU fiscal framework
It is often claimed that the introduction of the EU rules-based fiscal framework of the Maastricht Treaty and the Stability and Growth Pact was responsible for a decline in public investment shares in EU countries. Proposals have also been made in recent times in favour of a revision of the EU fiscal framework in such a way to grant special treatment to public capital expenditures (e.g., by amending it with a â€˜golden rule'). This paper analyses empirically the relation between the introduction of the EU fiscal framework and public investment. Results from panel data analysis suggest that the impact of the EU rules for fiscal discipline is not a clear-cut one. On the one hand, after phase II of EMU, public investment is found to be more negatively affected by debt levels. This is consistent with the view that in the run-up to Maastricht the budgetary adjustment implied a significant decline in public investment, especially in high-debt countries. On the other hand, results indicate that after phase II of EMU public investment became positively related to previous period budget balances, so that the improvement in the budget balances consequent to the introduction of the EU fiscal rules may have helped to create room for public investment in several EU countries.
|Date of creation:||May 2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: +32 2 298.08.23
Web page: http://ec.europa.eu/economy_finance/index_en.htm
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Domberger, Simon & Jensen, Paul, 1997. "Contracting Out by the Public Sector: Theory, Evidence, Prospects," Oxford Review of Economic Policy, Oxford University Press, vol. 13(4), pages 67-78, Winter.
- Holtz-Eakin, Douglas & Schwartz, Amy Ellen, 1995.
"Infrastructure in a structural model of economic growth,"
Regional Science and Urban Economics,
Elsevier, vol. 25(2), pages 131-151, April.
- Douglas Holtz-Eakin & Amy Ellen Schwartz, 1994. "Infrastructure in a Structural Model of Economic Growth," NBER Working Papers 4824, National Bureau of Economic Research, Inc.
- Guido Tabellini & Alberto Alesina, 1988.
"Voting on the Budget Deficit,"
UCLA Economics Working Papers
539, UCLA Department of Economics.
- Alberto Alesina & Guido Tabellini, 1988. "Voting on the Budget Deficit," NBER Working Papers 2759, National Bureau of Economic Research, Inc.
- Alesina, Alberto F & Tabellini, Guido, 1988. "Voting on the Budget Deficit," CEPR Discussion Papers 269, C.E.P.R. Discussion Papers.
- Tabellini, Guido & Alesina, Alberto, 1990. "Voting on the Budget Deficit," Scholarly Articles 4553030, Harvard University Department of Economics.
- Otto, Glenn & Voss, Graham M, 1994. "Public Capital and Private Sector Productivity," The Economic Record, The Economic Society of Australia, vol. 70(209), pages 121-32, June.
- Otto, Glenn & Voss, Graham, 1996. "Public Capital and Private Production in Australia," MPRA Paper 52110, University Library of Munich, Germany.
- Jakob Haan & Jan Sturm & Bernd Sikken, 1996. "Government capital formation: Explaining the decline," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 132(1), pages 55-74, March.
- Sturm, Jan Egbert & de Haan, Jakob, 1995.
"Is public expenditure really productive?: New evidence for the USA and The Netherlands,"
Elsevier, vol. 12(1), pages 60-72, January.
- Jan Egbert Sturm & Jakob de Haan,, 1994. "Is public expenditure really productive? New evidence for the US and the Netherlands," Working Papers 20, Centre for Economic Research, University of Groningen and University of Twente.
- James Poterba, 1992.
"Capital Budgets, Borrowing Rules, and State Capital Spending,"
NBER Working Papers
4235, National Bureau of Economic Research, Inc.
- Poterba, James M., 1995. "Capital budgets, borrowing rules, and state capital spending," Journal of Public Economics, Elsevier, vol. 56(2), pages 165-187, February.
- Robert A. J. Dur & Ben D. Peletier & Otto H. Swank, 1999. "Voting on the Budget Deficit: Comment," American Economic Review, American Economic Association, vol. 89(5), pages 1377-1381, December.
- Galí, Jordi & Perotti, Roberto, 2003.
"Fiscal Policy and Monetary Integration in Europe,"
CEPR Discussion Papers
3933, C.E.P.R. Discussion Papers.
- Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1127-1161.
- Spackman, Michael, 2002. "Public-private partnerships: lessons from the British approach," Economic Systems, Elsevier, vol. 26(3), pages 283-301, September.
- M.G. Pollitt, 2000. "The Declining Role of the State in Infrastructure Investments in the UK," Cambridge Working Papers in Economics 0001, Faculty of Economics, University of Cambridge.
- Evans, Paul & Karras, Georgios, 1994. "Are Government Activities Productive? Evidence from a Panel of U.S. States," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 1-11, February.
- Robert Ford & Pierre Poret, 1991. "Infrastructure and Private-Sector Productivity," OECD Economics Department Working Papers 91, OECD Publishing.
- Morrison, Catherine J & Schwartz, Amy Ellen, 1996.
"State Infrastructure and Productive Performance,"
American Economic Review,
American Economic Association, vol. 86(5), pages 1095-1111, December.
- Baltagi, Badi H & Pinnoi, Nat, 1995. "Public Capital Stock and State Productivity Growth: Further Evidence from an Error Components Model," Empirical Economics, Springer, vol. 20(2), pages 351-59.
- JÃ¼rgen von Hagen & Andrew Hughes Hallett & Rolf Strauch, 2001. "Budgetary Consolidation in EMU," European Economy - Economic Papers 148, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Jordi GalÌ & Roberto Perotti, 2003. "Fiscal policy and monetary integration in Europe," Economic Policy, CEPR;CES;MSH, vol. 18(37), pages 533-572, October.
- Sturm, Jan-egbert & Jacobs, Jan & Groote, Peter, 1999. "Output Effects of Infrastructure Investment in the Netherlands, 1853-1913," Journal of Macroeconomics, Elsevier, vol. 21(2), pages 355-380, April.
- Blanchard, Olivier J & Giavazzi, Francesco, 2004. "Improving the SGP Through a Proper Accounting of Public Investment," CEPR Discussion Papers 4220, C.E.P.R. Discussion Papers.
- Merriman, David, 1991. "Public capital and regional output : Another look at some Japanese and American data," Regional Science and Urban Economics, Elsevier, vol. 20(4), pages 437-458, February.
When requesting a correction, please mention this item's handle: RePEc:euf:ecopap:0202. 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: (ECFIN INFO)
If references are entirely missing, you can add them using this form.