FISCAL RULES AND PUBLIC INVESTMENT

Eric Peree () and Timo Valila
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Eric Peree: European Investment Bank, Economic and Financial Studies

No 2005/2, Economic and Financial Reports from European Investment Bank, Economics Department

Abstract: This paper examines the link between fiscal rules and public investment both normatively and empirically. We first review the arguments for and against including public investment spending in a fiscal deficit rule. We then seek to assess the determinants of public investment, with a special focus on the role of the fiscal rules embodied in EMU. We conclude that there are practical difficulties precluding the introduction of a "golden rule" and that there is virtually no evidence that EMU would have affected public investment. Therefore, the focus on safeguarding the level of public investment is somewhat misplaced; instead, one should focus on safeguarding its productivity.

Keywords: Fiscal rules; public investment; fiscal deficit; European Monetary Union (search for similar items in EconPapers)
JEL-codes: C23 E62 E65 H54 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2005-02-28
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:eibefr:2005_002

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