Should Public Capital Be Subsidized or Provided?

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

No 75, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

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.

Pages: 22 pages
Date: 1999-09
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Citations: View citations in EconPapers (2)

Published in Journal of Monetary Economics, Volume 41, Issue 2, 27 February 1998, Pages 319-331

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Related works:
Working Paper: Should Public Capital Be Subsidized or Provided? (2002)
Journal Article: Should public capital be subsidized or provided? (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:75

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