Fiscal Deficits and the Productivity of Public Capital

Basil Dalamagas

Revue Économique, 1998, vol. 49, issue 5, 1241-1268

Abstract: [fre] Deficits budgetaires et la productivite du capital public. . La relation entre l'élasticité du produit à l'investissement public et un ensemble de variables proposées par la littérature est analysée pour un grand échantillon de pays, dans le cadre du modèle de croissance endogène de Barro. Plusieurs de ces variables influencent la productivité du service public mais pas d'une façon robuste ; la seule exception est le déficit public. En particulier, alors qu'il paraît que le service public est essentiel au processus de croissance au moyen de la provision de l'infrastructure, la croissance ante-sustentée peut être menacée par le financement excessif du déficit public, facteur qui a une influence opposée sur la productivité du capital public. [eng] Fiscal Deficits and the Productivity of Public Capital. . Adopting the endogenous growth modelling strategy of Barro, the relation between the output elasticity of government investment and a variety of variables suggested by the theoretical literature is analyzed for a large sample of countries. We show that several of our variables influence the productivity of public services through various channels, but not in a robust way ; the only exception is fiscal deficits. In particular, even though government services are shown to be essential for the growth process through the provision of infrastructure, self-sustaining growth can be undermined by excessive deficit financing that adversely affects the productivity of public capital.

Date: 1998
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