Government investment and the European stability and growth pact

Marco Bassetto and Vadym Lepetyuk

Economic Perspectives, 2007, vol. 31, issue Q III, 33-43

Abstract: The authors analyze whether it makes sense to treat public investment spending differently from other government spending when applying the deficit constraints mandated within the single European currency area. Given the low rates of population growth, mobility, and mortality in European countries, they find that excluding public investment from the computation of the deficit ceiling has only moderate implications for the current generations? spending choices. They also show that excluding net investment yields better outcomes than excluding gross investment.

Keywords: Investments; European Monetary System (Organization) (search for similar items in EconPapers)
Date: 2007
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Working Paper: Government Investment and the European Stability and Growth Pact (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhep:y:2007:i:qiii:p:33-43:n:v.31no.3

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