Characterizing the Optimal Composition of Government Expenditures

Rafaela Perez

No E2004/81, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: This paper extends the neoclassical growth model with productive public capital by including an infrastructure efficiency index, which is assumed to depend on a public choice variable, in particular, the share of public spending allocated to productive public consumption. A golden rule for the allocation of public expenditure between productive consumption and investment is specified. Under this framework, the observed path for the stock of infrastructures and the proposed efficiency index in the US economy during the last fifty years have been close to optimal: a lower stock of infrastructures has been accumulated, but it has been used more efficiently.

Keywords: Public Expenditure Composition; Public Investment; Public Consumption; Nominal and Effective Infrastructures; Infrastructures Efficiency Index (search for similar items in EconPapers)
JEL-codes: E62 E65 H40 H54 O41 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2004
New Economics Papers: this item is included in nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Characterizing the Optimal Composition of Government Expenditures (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:cea:doctra:e2004_81

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