Macroeconomic Dimensions of Public-Private Partnerships

Edward Buffie, Michele Andreolli, Grace Li and Luis-Felipe Zanna

No 2016/078, IMF Working Papers from International Monetary Fund

Abstract: The voluminous literature comparing public-private partnerships (P3s) and own-investment (OI) by the public sector is dominated by contributions from microeconomic theory. This paper gives macroeconomics a voice in the debate by investigating the repercussions of P3 vs. OI in a dynamic general equilibrium model featuring private capital accumulation and involuntary unemployment with efficiency wages. Typically P3s cost more but produce higher-quality infrastructure and boast a better on-time completion record than OI; consequently, they are comparatively more effective in reducing underinvestment in private capital, underinvestment in infrastructure, unemployment and poverty. The asymmetric impact on macro externalities raises the social return in the P3 2 - 9 percentage points relative to the social return to OI, depending on whether the externalities operate singly or in combination and on whether P3 enjoys an advantage in speed of construction.

Keywords: WP; Public-private Partnerships; Unemployment; Underinvestment; Welfare.; national budget; infrastructure investment; wage curve; direct return; welfare gain; involuntary unemployment; production function; Infrastructure; Employment; Wages; Unemployment rate; Real wages; Africa (search for similar items in EconPapers)
Pages: 49
Date: 2016-03-24
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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