Private investment and public investment: total rates of return and global balances in the OECD

Antonio Afonso, José Alves and Sofia Monteiro

No 2025/0363, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: We assess the relevance of macro rates of return on time-varying fiscal and external sustainability. First, we compute the total public and private macroeconomic rates of return for 16 OECD countries from 1980 to 2022. We find that there is a positive impact of higher investment returns on stimulating higher aggregate demand, therefore resulting in higher tax revenues, which in turn lead to greater fiscal sustainability and more external sustainability by lowering the need for foreign capital and imports of goods and services. Accordingly, we demonstrate that macroeconomic rates of return of both public and private investment positively contribute to fiscal sustainability and that public sector investment also displays the same positive effect on external sustainability.

Keywords: Macroeconomic Rates of Return; Fiscal Sustainability; External Sustainability; Time-varying; Public Investment; Private Investment. (search for similar items in EconPapers)
JEL-codes: E22 F41 H54 H61 (search for similar items in EconPapers)
Date: 2025-01
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://rem.rc.iseg.ulisboa.pt/wps/pdf/REM_WP_0363_2025.pdf (application/pdf)

Related works:
Working Paper: Private Investment and Public Investment: Total Rates of Return and Global Balances in the OECD (2025)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp03632025

Access Statistics for this paper

More papers in Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa ISEG - Lisbon School of Economics and Management, REM, R. Miguel Lupi, 20, LISBON, PORTUGAL.
Bibliographic data for series maintained by Sandra Araújo ().