Is There a Lack of Public Capital in the European Union?

EIB Working Paper

41 Pages Posted: 6 Jul 2005

Date Written: April 2005

Abstract

This paper investigates whether there is a lack of public capital in European Union countries. The analysis builds on a new database providing internationally comparable capital stock estimates for 22 OECD countries, among these 14 EU countries, for the period 1960-2001. A simple model of endogenous growth is used in order to highlight the inherently nonlinear relationship between public capital and economic growth and in order to derive a measure of the growth-maximizing public capital stock. Against this background the empirical analysis provides estimates of the growth-maximizing level of public capital for EU countries. The empirical results suggest that there currently is no lack of public capital in most 'old' EU countries.

Keywords: Public capital, economic growth, optimal fiscal policy, OECD countries

JEL Classification: E62, H54

Suggested Citation

Kamps, Christophe, Is There a Lack of Public Capital in the European Union? (April 2005). EIB Working Paper, Available at SSRN: https://ssrn.com/abstract=753004 or http://dx.doi.org/10.2139/ssrn.753004

Christophe Kamps (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 20
D-60314 Frankfurt am Main
Germany

HOME PAGE: http://https://www.ecb.europa.eu/pub/research/authors/profiles/christophe-kamps.en.html

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