The economic cost of public funds in infrastructure investment

Armin Riess ()

No 4/2008, EIB Papers from European Investment Bank, Economics Department

Abstract: This paper discusses alternative ways of defining and measuring the marginal economic cost of public funds and reviews empirical cost estimates - including estimates for EU countries. Moreover, it illustrates how the economic cost of public funds should be accounted for in cost-benefit analyses of government expenditure, notably on public infrastructure, and how the cost-benefit assessment changes if user fees contribute to the financing of infrastructure services. The paper also clarifies why the economic cost of public funds must not be confused with the social discount rate, social opportunity cost, and the interest rate on government debt. In this context, the paper discusses how government borrowing - that is, taxing later in lieu of taxing now - affects the cost-benefit assessment.

Keywords: cost of public funds; excess burden of taxation; infrastructure; user fees; discounting (search for similar items in EconPapers)
JEL-codes: D60 H21 H43 H54 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2008-07-18
New Economics Papers: this item is included in nep-pbe
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.eib.org/attachments/efs/eibpapers/eibpa ... 3_n01_en.pdf#page=84 Full text (application/pdf)

Related works:
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:ris:eibpap:2008_004

Access Statistics for this paper

More papers in EIB Papers from European Investment Bank, Economics Department Contact information at EDIRC.
Bibliographic data for series maintained by Polyxeni Kanelliadou ().