Growth and Public Infrastructure

Nigar Hashimzade and Gareth Myles ()

No em-dp2009-03, Economics Discussion Papers from Department of Economics, University of Reading

Abstract: The paper analyzes a multi-country extension of the Barro model of productive public expenditure. In the presence of infrastructural externalities between countries the provision of infrastructure will be inefficiently low if countries do not coordinate. This provides a role for a supra-national body, such as the EU, to coordinate the policies of the individual governments. It is shown how the supranational body can ensure the efficient level of infrastructure provision and, as a result, obtain an increased rate of growth. The results of the paper also show how capital flows between countries act to equalize growth rates. This can help explain why there is limited empirical evidence for tax rates causing a difference in growth rates between countries. This is not the same as saying taxation does not affect growth: if production requires public infrastructure then taxation is needed for growth. The flow of capital acts to distribute the benefit of this across countries.

Pages: 35 pages
Date: 2009-01-19
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.henley.reading.ac.uk/nmsruntime/saveasdialog.asp?lID=35195&sID=116295 (application/pdf)

Related works:
Journal Article: GROWTH AND PUBLIC INFRASTRUCTURE (2010)
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:rdg:emxxdp:em-dp2009-03

Access Statistics for this paper

More papers in Economics Discussion Papers from Department of Economics, University of Reading Contact information at EDIRC.
Bibliographic data for series maintained by Alexander Mihailov ().