scholarly journals On the Substitution of Private and Public Capital in Production

2019 ◽  
Vol 19 (232) ◽  
Author(s):  
Zidong An ◽  
Alvar Kangur ◽  
Chris Papageorgiou
Keyword(s):  
Production Function ◽  
Public Capital ◽  
Physical Capital ◽  
Elasticity Of Substitution ◽  
Point Estimate ◽  
Private Capital ◽  
Public And Private ◽  
Macroeconomic Models ◽  
Private And Public ◽  
Penn World Table

Most macroeconomic models assume that aggregate output is generated by a specification for the production function with total physical capital as a key input. Implicitly this assumes that private and public capital stocks are perfect substitutes. In this paper we test this assumption by estimating a nested-CES production function whereas the two types of capital are considered separately along with labor as inputs. The estimation is based on our newly developed dataset on public and private capital stocks for 151 countries over a period of 1960-2014 consistent with Penn World Table version 9. We find evidence against perfect substitutability between public and private capital, especially for emerging and LIDCs, with the point estimate of the elasticity of substitution estimated closely around 3.

The Effect of Public Capital on Aggregate Output

2013 ◽  
Vol 64 (1) ◽  
pp. 51-72
Author(s):  
Jan-Erik Wesselhöft
Keyword(s):  
Dynamic Effect ◽  
High Growth ◽  
Public Capital ◽  
Oecd Countries ◽  
Crowding Out ◽  
Private Capital ◽  
Large Set ◽  
Public And Private ◽  
Long Run ◽  
Positive Effect

Abstract Based on new estimates of public and private capital stocks for 22 OECD countries we study the dynamic effect of public capital on the real gross domestic product using a vector autoregression approach. Whereas most former studies put effort on examining the effects of public capital in a single country, this paper covers a large set of OECD countries. The results show that public capital has a positive effect on output in the short-, medium- and long-run in most countries. In countries where the effect is negative, possible explanations as the different productivities of investments, crowding out or high growth rates of government debt are analyzed.

scholarly journals Public Capita and Growth: The Role of Institutions in Development

2021 ◽  
Vol 17 (4) ◽  
pp. 121
Author(s):  
Fred EKA
Keyword(s):  
Developing Countries ◽  
Econometric Model ◽  
Public Capital ◽  
Simultaneous Equations ◽  
Crowding Out ◽  
Private Capital ◽  
African Countries ◽  
Public And Private ◽  
The Public

This study analyzes the links between public capital and growth using an econometric model of simultaneous equations, estimated on a panel of forty-three developing countries over the period 2003-2020. This growth model explains the determinants of GDP and public and private capital stocks. The accumulation of public, private and human capital generates externalities that are sources of endogenous growth. However, the formation of public capital generated a crowding out effect, to the detriment of that of private capital, because of differentiated budgetary constraints. Our results show that several developing countries have moved away from an optimal structure for the growth of sharing of available capital between the public and private sectors. In doing so, are institutions a prerequisite for the economic development of African countries.

scholarly journals A Biological Theory of Social Discounting

2014 ◽  
Vol 104 (11) ◽  
pp. 3481-3497 ◽  
Author(s):  
Arthur J. Robson ◽  
Balázs Szentes
Keyword(s):  
Group Selection ◽  
Public Capital ◽  
Rate Of Return ◽  
Private Capital ◽  
Trade Offs ◽  
Social Discounting ◽  
Private And Public ◽  
Private Savings ◽  
Saving Decisions ◽  
Individual Choices

We consider a growth model in which intergenerational transfers are made via stocks of private and public capital. Private capital is the outcome of individuals' private savings while decisions regarding public capital are made collectively. We hypothesize that private saving choices evolve through individual selection while public saving decisions are the result of group selection. The main result of the paper is that the equilibrium rate of return to private capital is at least 2–3 percent more than the rate of return to public capital. In other words, social choices involving intertemporal trade-offs exhibit much more patience than individual choices do. (JEL D11, D71, D91, H43)

scholarly journals The Impact of OFDI and Institutional Quality on Domestic Capital Formation at the Disaggregated Level: Evidence for Developed and Emerging Countries

2020 ◽  
Vol 12 (9) ◽  
pp. 3661
Author(s):  
Waqar Ameer ◽  
Kazi Sohag ◽  
Helian Xu ◽  
Musaad Mansoor Halwan
Keyword(s):  
Emerging Economies ◽  
Institutional Quality ◽  
Private Investment ◽  
Public Capital ◽  
Developed Countries ◽  
Capital Formation ◽  
Emerging Countries ◽  
Private Capital ◽  
Domestic Capital ◽  
Private And Public

In this study, we investigate whether outbound foreign direct investment (OFDI) either augments or impedes domestic public and private investment, incorporating the role of institutional quality into the context of developed and emerging countries. To this end, we apply a cross-sectional-autoregressive-distributed lag (CS-ARDL) approach to analyze panel data from the period 1996–2017. Our empirical findings suggest that OFDI augments private capital formation for developed countries. Institutional quality (IQ) is found to be a driving factor that promotes private capital formation in the established economies of developed countries. However, OFDI has a negative association with the public capital formation in the established economies of developed countries, while IQ has a positive association with it. In the context of emerging economies, OFDI is found to be too insignificant to have an effect on private and public capital formation. Interestingly, IQ has a detrimental effect on both private and public capital formation in emerging economies. Our findings are robust. The empirical findings of this study imply that institutional quality should continue to be improved in developed countries, while it should surpass a certain threshold for emerging economies to promote domestic capital formation.

scholarly journals Estimating the Share and Elasticity of Substitution for Public and Private Health Expenditures in Iran

2020 ◽  
Author(s):  
Mahdi Shahraki ◽  
Simin Ghaderi
Keyword(s):  
Public Health ◽  
Life Expectancy ◽  
Linear Models ◽  
National Level ◽  
Health Expenditures ◽  
Elasticity Of Substitution ◽  
Series Data ◽  
Public And Private ◽  
Private And Public ◽  
Public Health Expenditures

Background: The rate of substitution for private and public health expenditures is one of the factors that can explain the different effects of public and private health expenditures on health and life expectancy. Therefore, the purpose of this study was to estimate the return to scale, share, and elasticity of the substitution for public and private health expenditures in Iran. Methods: In this descriptive-analytical study, linear and nonlinear least squares methods were applied to study the share and elasticity in substitution of private and public health expenditures at national level in Iran during 2000-17. The study data included the annual time series data extracted from the World Bank website. The Stata 14 software was used to estimate the economic model. Results: In the nonlinear and linear models of Elasticity of Substitution Constant (CES) health function in Iran, elasticity of substitution for public and private health expenditures were 0.30 and 0.17, respectively. The return to scale in nonlinear and linear models was 0.07 and 0.15, respectively. The share of public health expenditures on life expectancy in the nonlinear and linear model was 54 and 53 % and the share of private health expenditures in these models was 46 and 47 %, respectively. Conclusion: Public and private health expenditures are poor substitutes of each other in Iran and increase of these health expenditures leads to an increase in life expectancy. A decreasing return exists to scale in public and private health expenditures on life expectancy in Iran. The share of public health expenditures is higher than the share of private health expenditures on life expectancy in Iran.

scholarly journals Impact De La Fiscalite Sur La Croissance Economique Du Maroc

2017 ◽  
Vol 13 (4) ◽  
pp. 104 ◽  
Author(s):  
Moustapha Hamzaoui ◽  
Nezha Bousselhami
Keyword(s):  
Economic Growth ◽  
Production Function ◽  
Public Capital ◽  
Simultaneous Equations ◽  
Tax Revenue ◽  
Private Capital ◽  
Function Type ◽  
The Public ◽  
Endogenous Growth Model ◽  
The Relationship

This paper examines how the taxation (tax revenue) affects the economic growth in Morocco relying to the endogenous growth model of Barro (1990). After recalculating a new series of public capital and private capital and based on simultaneous equations model, one production function type Cobb Douglas with 3 factors (public capital, private capital and employment) has been estimated with data covering the period 1980-2015. The idea is to measure the effect of taxation on economic growth through its impact on public capital. The results find that the relationship between the two variables is positive. The householders can finance the public capital by taxes. And the public capital improves the economic growth.

scholarly journals Evaluating Changes in the Transmission Mechanism of Government Spending Shocks

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Nooman Rebei
Keyword(s):  
Government Spending ◽  
Private Consumption ◽  
Public Spending ◽  
Transmission Mechanism ◽  
Elasticity Of Substitution ◽  
Public And Private ◽  
Elasticity Of Intertemporal Substitution ◽  
Public Consumption ◽  
Private And Public ◽  
Rolling Windows

AbstractWe empirically revisit the crowding-in effect of government spending on private consumption based on rolling windows of U.S. data. Results show that in earlier samples government spending is increasingly crowding in private consumption; however, this relation is reverted in the latest periods. We propose a model embedding non-separable public and private consumption in the utility function and rule-of-thumb consumers to assess the sources of non-monotonic changes in the transmission of the shock. The iterative full information estimation of the model reveals that changes in the co-movement between private and public spending is primarily driven by the fluctuations in the elasticity of substitution between private and public consumption, the share of financially constrained consumers, and the elasticity of intertemporal substitution.

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