Dynamic Macroeconomic Effects of Public Capital: Evidence from Regional Italian Data

Valter Di Giacinto, Giacinto Micucci and Pasqualino Montanaro ()
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Pasqualino Montanaro: Bank of Italy, Regional Economic Research Unit

Giornale degli Economisti, 2010, vol. 69, issue 1, 29-66

Abstract: Based on a VAR model, which allows to take into account direct and indirect links between the variables, this paper shows that public capital positively and persistently affects GDP in Italy and in its main geographic areas. This result is also attributable to a strong stimulus exerted on private capital (crowding in). A higher elasticity of GDP to public capital is estimated for the South, whereas marginal productivity turns out to be higher in the Centre-North. This suggests that public capital has a lower economic return in the South, bearing out the existence of a potential conflict between equity and efficiency goals.

Keywords: Public capital; crowding in effects; Italian regional divides; VAR models (search for similar items in EconPapers)
JEL-codes: C32 H54 R53 (search for similar items in EconPapers)
Date: 2010
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Working Paper: Dynamic macroeconomic effects of public capital: evidence from regional Italian data (2009)
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