Should Public Capital Be Subsidized or Provided?

Shantayanan Devarajan, Danyang Xie and Heng-Fu Zou
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Shantayanan Devarajan: World Bank

Macroeconomics from EconWPA

Abstract: In an endogenous-growth model, we consider alternative ways of providing public capital using distortionary taxes. We show that if the government provides the good, the resulting growth rate and welfare may or may not be higher than under laissez-faire. By contrast, if the government subsidizes private providers, not only are growth and welfare higher than under public provision, they are also unambiguously higher than under laissez-faire. Forthcoming 1998. Journal of Monetary Economics.

Keywords: Public Capital; Subsidy; Taxes; Public Provision (search for similar items in EconPapers)
JEL-codes: E62 H2 H4 H5 O4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-pbe
Date: 2002-12-11
Note: Type of Document - PDF; prepared on PC; to print on HP; pages: 22 ; figures: none
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Related works:
Journal Article: Should public capital be subsidized or provided? (1998)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0212005

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