Congestion and Public Capital
Abstract: This paper analyzes the impact of public investment on the dynamics of private capital formation in an intertemporal optimizing market-clearing framework. The key feature characterizing the analysis is that the public good is treated as a durable capital good, subject to congestion. We sho...Link(s) zu Dokument(en): | IHS Publikation |
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Hauptverfasser: | , |
Format: | IHS Series NonPeerReviewed |
Sprache: | Englisch |
Veröffentlicht: |
Institut für Höhere Studien
1997
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Zusammenfassung: | Abstract: This paper analyzes the impact of public investment on the dynamics of private capital formation in an intertemporal optimizing market-clearing framework. The key feature characterizing the analysis is that the public good is treated as a durable capital good, subject to congestion. We show how in the presence of congestion the effect of government investment on private capital formation involves a tradeoff between the degree of substitution between private and public capital in production and the degree of congestion. Both lump-sum and distortionary tax financing are considered, with this tradeoff being tightened in the latter case.; |
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