Economic Growth and Public and Private Investment Returns

Antonio Afonso and Miguel Aubyn ()

No 2016/14, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: We study the macroeconomic effects of public and private investment in 17 OECD economies through a VAR analysis with annual data from 1960 to 2014. From impulse response functions we find that public investment had a positive growth effect in most countries, and a contractionary effect in Finland, UK, Sweden, Japan, and Canada. Public investment led to private investment crowding out in Belgium, Ireland, Finland, Canada, Sweden, the UK and crowding-in effects in the rest of the countries. Private investment has a positive growth effect in all countries; crowds-out (crowds-in) public investment in Belgium and Sweden (in the rest of the countries). The partial rates of return of public and private investment are mostly positive. Key Words : fiscal policy, public investment, private investment, impulse response functions, VAR

JEL-codes: C32 E22 E62 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (2)

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