The effect of public investment in Europe: a model-based assessment
Marien Ferdinandusse (),
Jasper De Jong and
No 2021, Working Paper Series from European Central Bank
We consider the effect of an increase in public investments on output in Europe against the background of a sharp drop of public investments in a number of EU countries during the crisis and subsequent policy discussions on the need to stimulate public investments. We start with a brief overview of recent developments in public investments, including some methodological issues, and provide a literature overview of the effect of public investments on growth. On the basis of updated estimates of the public capital stock, we estimate the output response to a public capital impulse, using VAR models. In addition, using a structural model, we investigate the sensitivity of the macroeconomic impact of an increase in public investments to alternative assumptions about economic structures and policy implementations. JEL Classification: E32, E62, C30
Keywords: euro area; fiscal policy; general equilibrium modelling; public investment (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20172021
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