scholarly journals REVISITING THE OPTIMAL STATIONARY PUBLIC INVESTMENT POLICY IN ENDOGENOUS GROWTH ECONOMIES

2008 ◽  
Vol 12 (2) ◽  
pp. 172-194 ◽  
Author(s):  
GUSTAVO A. MARRERO
Keyword(s):  
Endogenous Growth ◽  
Public Investment ◽  
Public Capital ◽  
Optimal Choice ◽  
Public Infrastructure ◽  
The Public ◽  
Developed Economies ◽  
Elasticity Of Intertemporal Substitution ◽  
Output Ratio ◽  
Public Investment Policy

One part of the literature on endogenous growth concerns models where public infrastructure affects the private production process. An unsolved puzzle in this literature concerns observed public investment-to-output ratios for developed economies, which tend to fall short of theoretical model-based optimal ratios. We reexamine the optimal choice of public investment in a more general framework. This setting allows for long-lasting capital stocks, a lower depreciation rate for public capital than for private capital, an elasticity of intertemporal substitution that differs from unity, and the need to finance a nontrivial share of public services in output. Given other fundamentals in the economy, we show that the optimal public investment-to-output ratio is smaller for low-growth economies, for economies populated by consumers with low preferences for substituting consumption intertemporally, and when public capital is durable. For a calibrated economy, we show that a combination of these factors solves the public investment puzzle.

Thai Public Capital Budget and Management Process

2019 ◽  
pp. 206-235
Author(s):  
Arwiphawee Srithongrung ◽  
Kenneth A. Kriz
Keyword(s):  
Local Governments ◽  
Public Investment ◽  
Public Capital ◽  
Capital Budgeting ◽  
Infrastructure Investment ◽  
Budget Process ◽  
Public Infrastructure ◽  
The Public ◽  
Debt Capacity

This chapter describes the public capital budgeting process in Thailand. Public infrastructure is very centralized; local governments do not play a large role in public infrastructure investment. The country's long-term physical planning is fragmented and lacks an effective long-term fiscal planning. The budget process is dominated by senior civil servants in the Bureau of the Budget, the Ministry of Finance, Bank of Thailand, and the National Economic and Social Development Board. Expensive projects financed by long-term debt bypass the budget process, and as a result, a comprehensive list of annually approved projects is unavailable to the public. This leads to public investment being driven almost entirely by debt capacity. Because of these factors, Thai governments have invested too little in public infrastructure, and the infrastructure investment is uneven across sectors.

scholarly journals DYNAMIC ANALYSIS OF REDUCTIONS IN PUBLIC DEBT IN AN ENDOGENOUS GROWTH MODEL WITH PUBLIC CAPITAL

2016 ◽  
Vol 21 (6) ◽  
pp. 1454-1483 ◽  
Author(s):  
Noritaka Maebayashi ◽  
Takeo Hori ◽  
Koichi Futagami
Keyword(s):  
Endogenous Growth ◽  
Growth Model ◽  
Public Investment ◽  
Public Capital ◽  
Government Debt ◽  
The European Union ◽  
Fiscal Consolidation ◽  
Growth Pact ◽  
Endogenous Growth Model ◽  
The Government

We construct an endogenous growth model that includes productive public capital and government debt. We assume that the government debt-to-GDP ratio is gradually adjusted to a target level, reflecting the permanent commitment rules in the Stability and Growth Pact or the Maastricht Treaty in the European Union (i.e., the well-known 60% rule). These rules affect government borrowing and public investment. Here, we examine the welfare implications of the permanent commitment rules. We find that fiscal consolidation based on the rules improves social welfare. Moreover, the improvement in welfare accelerates as fiscal consolidation progresses more rapidly. Last, we also discuss and derive the optimal long-run debt-to-GDP ratio.

scholarly journals Calculation of Impact of Construction Investment to the Public Infrastructure

2017 ◽  
Vol 17 (1) ◽  
pp. 31-36
Author(s):  
Martin Ferko ◽  
Jan Česelský ◽  
Zbyněk Proske
Keyword(s):  
Decision Making ◽  
Computational Model ◽  
Public Administration ◽  
Public Investment ◽  
Land Development ◽  
Public Infrastructure ◽  
The Public ◽  
New Construction ◽  
Community Facilities ◽  
The Impact

Abstract The paper shortly introduces and describes a computational model that illustrates the impact of land development construction investment in the form of creating new needs for public infrastructure and community facilities in the territory. New construction investment may also initiate other construction investment, which also increases the demands on ensuring the capacity of public infrastructure. For public administration (local and regional), the created model can facilitate preparation, decision-making and management of public investment in the territory while respecting the 3E principle.

The Case of Public Capital Budgeting and Management Processes in the United States

2019 ◽  
pp. 23-48 ◽  
Author(s):  
Natalia B. Ermasova ◽  
Carol Ebdon
Keyword(s):  
United States ◽  
Public Investment ◽  
Public Capital ◽  
Capital Budgeting ◽  
The United States ◽  
Federal State ◽  
Public Infrastructure ◽  
Positive Theory ◽  
State And Local ◽  
Main Components

This chapter provides a case study from the United States regarding public capital budgeting and management on the federal, state, and local levels. The U.S. case of the public investment process (or positive theory for United States public investment) is described and compared with the normative theory outlined in Chapter 1 to understand the deviation between the positive and normative theories. This chapter presents an analysis of four main components of the USA capital budgeting system including (1) long-term public capital planning, (2) annual public budgeting and financing, (3) project execution, and (4) public infrastructure evaluation. In addition, this chapter shows public infrastructure needs and financing issues in the United States.

scholarly journals Public Capital and the Labor Income Share

2018 ◽  
Vol 10 (11) ◽  
pp. 3895
Author(s):  
Pedro Bom ◽  
Aitor Goti
Keyword(s):  
Public Investment ◽  
Public Capital ◽  
Empirical Literature ◽  
Small Scale ◽  
Labor Income ◽  
Private Capital ◽  
Labor Share ◽  
Developed Economies ◽  
Long Run ◽  
Negative Effect

The decline of the labor share of income over the last few decades has been documented for many developed economies. A declining labor share is associated with rising income inequality, which raises obvious economic and social concerns. Although several explanations for this fact have been provided in the literature, they usually rely on elastic substitution between private capital and labor, which is generally not supported by the empirical literature. We argue in this paper that the fall in the labor share is potentially associated with the decline in public investment ratios, which have also been observed in most developed economies in the last few decades. We use a calibrated small-scale macroeconomic model to show how a negative public investment shock can have a sizeable negative effect on the labor share. Two assumptions are key in this result: that public capital directly augments private capital in production and that the elasticity of substitution between private capital and labor is smaller than one. We argue that both assumptions are plausible in practice. Our results suggest that, to promote long-run sustainable and inclusive growth, governments should increase the fraction of output devoted to public investment.

ENDOGENOUS GROWTH WITH PUBLIC CAPITAL AND PROGRESSIVE TAXATION

2014 ◽  
Vol 19 (6) ◽  
pp. 1220-1239 ◽  
Author(s):  
Constantine Angyridis
Keyword(s):  
Labor Supply ◽  
Endogenous Growth ◽  
Gini Coefficient ◽  
Positive Impact ◽  
Public Investment ◽  
Wealth Distribution ◽  
Public Capital ◽  
Policy Reforms ◽  
Discount Factors ◽  
Elastic Labor Supply

This paper considers an endogenous growth model with public capital and heterogeneous agents. Heterogeneity is due to differences in discount factors and inherent abilities. This allows us to closely approximate the 2007 U.S. income and wealth distributions. Government expenditures, including public investment, are financed through a progressive income tax along with a flat tax on consumption. Three revenue-neutral fiscal policy reforms are considered: (i) an increase in the degree of progressivity of the tax schedule that reduces the after-tax income distribution Gini coefficient to its lowest value over the period 1979–2009, (ii) a reduction in the progressivity ratio that causes the Gini coefficient of the wealth distribution to come close to 1, and (iii) an increase in the fraction of output allocated to public investment that has the same positive impact on the growth rate as reform (ii). It is shown that increasing investment in public capital is the only type of policy that simultaneously enhances growth and reduces both types of inequality (income and wealth). We also find that the public-investment-to-output ratio that maximizes social welfare crucially depends on the elasticity of the labor supply. With a more elastic labor supply the optimal ratio is 4.40%, whereas with a less elastic labor supply it is 5.53%.

scholarly journals Forms of international movement of capital with special emphasis on the PPP and concessions

Spatium ◽  
2016 ◽  
pp. 55-60
Author(s):  
Sanja Sovran ◽  
Miroljub Hadzic
Keyword(s):  
Roman Empire ◽  
Public Works ◽  
Public Infrastructure ◽  
Best Interest ◽  
The Public ◽  
Developed Economies ◽  
Public Baths ◽  
State Budgets ◽  
The Subject ◽  
Reduce Risk

The state has always cooperated with the private sector in order to implement various activities in the best interest of public. The first models of public-private partnerships (PPP) appeared at the time of the Roman Empire in the context of public works in construction of public baths, markets and ports. Contemporary international movement of capital is a phenomenon that has existed for over a century. When discussing the PPP in modern day terms, the expansion of private involvement in the public sector starts in the 1970s and the 1980s of the previous century, in public infrastructure projects and in most developed economies. The primary purpose of these arrangements is to reduce expenditures in state budgets, but also to achieve faster and better execution of work, reduce risk and efficiently manage the projects. This paper will briefly present the evolution of PPPs and concessions, with an emphasis on understanding money and capital throughout the evolution of PPP, contemporary forms of movement of capital, as well as equity in terms of globalization. The subject of this paper are also examples of the important PPPs and concessions from the construction of the Suez Canal until today.

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