Português
Should government increase public investment? An empirical analysis of the effects of public investment on private investment in 21 OECD countries
Event Title
33rd EBES Conference – Madrid
Year (definitive publication)
2020
Language
English
Country
Spain
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Abstract
The size of the public sector is often accused of suffocating the economy, however, it is also possible that it can have a boosting effect by stimulating private investment. This paper inspects the relationship between private investment and public investment in 21 OECD countries over the period comprised between 2000 and 2017. Using panel data methodologies that control for the cross-section dependence, our results suggest a positive effect of public investment on private investment, supporting the existence of crowding-in effects. Namely, a 1% increase in government investment yields a 0,18% increase in private investment. This analysis is robust to the average level of GDP growth rate, suggesting the existence of a strong complementarity between these two types of investment within these group of countries.
Acknowledgements
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Keywords
Private Investment,Public Investment,Economic growth,OECD
Fields of Science and Technology Classification
- Economics and Business - Social Sciences
Funding Records
| Funding Reference | Funding Entity |
|---|---|
| UIDB/00315/2020 | FCT (Fundação para a Ciência e a Tecnologia, Portugal) |
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