Should government investment be promoted ?

W. Melyn, Ruben Schoonackers, P. Stinglhamber and L. Van Meensel
Additional contact information
W. Melyn: National Bank of Belgium
P. Stinglhamber: National Bank of Belgium
L. Van Meensel: National Bank of Belgium

Economic Review, 2016, issue ii, 99-113

Abstract: Public investment is currently at a low level in Belgium and in many other European countries. However, public investment has a very positive impact on economic activity and on an economy’s production potential. It is therefore advisable to boost that investment, though of course without impairing the consolidation of public finances necessary to safeguard their sustainability. The article offers an overview of public investment and the initiatives for promoting it. A first section analyses the components of public investment, describes the trend in that investment and compares the situation in Belgium with the European picture. A second section examines the macroeconomic impact of public investment and sets out numerous arguments explaining why that investment needs to be increased. The last section looks at the various possible ways of encouraging an increase in public investment, which is desirable in the current circumstances. The article ends with some conclusions. As regards the statistical treatment of investment under the ESA 2010 methodological framework, the basic rules are clear and it is not desirable to redraft them. As regards the application of the European fiscal rules under the Stability and Growth Pact, serious consideration should be given to revising the way in which public investment is taken into account, with a view to more favourable treatment of that expenditure. This could be done by replacing investment expenditure with the amortisation of public investment when determining the relevant budget balance.

Keywords: public investment; investment multipliers; Stability and Growth Pact; Belgium; Europe. (search for similar items in EconPapers)
JEL-codes: E22 E60 E61 E62 H50 H54 H60 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.nbb.be/en/articles/should-public-investment-be-boosted (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbb:ecrart:y:2016:m:september:i:ii:p:99-113

Access Statistics for this article

More articles in Economic Review from National Bank of Belgium Contact information at EDIRC.
Bibliographic data for series maintained by ().