Economic Growth and Public and Private Investment Returns | Zendy

António Afonso | Zendy; Miguel St. Aubyn | Zendy

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Economic Growth and Public and Private Investment Returns

Author(s) -

António Afonso,

Miguel St. Aubyn

Publication year - 2016

Publication title -

ssrn electronic journal

Language(s) - English

Resource type - Journals

ISSN - 1556-5068

DOI - 10.2139/ssrn.2789390

Subject(s) - crowds , crowding out , investment (military) , public investment , economics , gross private domestic investment , open ended investment company , return on investment , private investment in public equity , rest (music) , public capital , monetary economics , private equity firm , private equity , finance , production (economics) , macroeconomics , political science , fiscal policy , medicine , computer security , cardiology , politics , computer science , law

We study the macroeconomic effects of public and private investment in 17 OECD economies through a VAR analysis with annual data from 1960 to 2014. From impulse response functions we find that public investment had a positive growth effect in most countries, and a contractionary effect in Finland, UK, Sweden, Japan, and Canada. Public investment led to private investment crowding out in Belgium, Ireland, Finland, Canada, Sweden, the UK and crowding-in effects in the rest of the countries. Private investment has a positive growth effect in all countries; crowds-out (crowds-in) public investment in Belgium and Sweden (in the rest of the countries). The partial rates of return of public and private investment are mostly positive. Key Words : fiscal policy, public investment, private investment, impulse response functions, VAR

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