How Should We Measure the Return on Public Investment in a VAR?
Economics Bulletin, Vol. 8, No. 5, 2006
Posted: 27 Dec 2006
A new method of empirically computing the macroeconomic returns to public investment is proposed. Pereira's (2000) technique is modified, and a measure which accounts for both public and private investment costs is suggested. An empirical application to US data shows that differences between alternative ways of measuring rates of return are non-trivial - taking into consideration the full investment effort halves estimated returns when partial public costs only are considered.
Keywords: public investment, rate of return, VAR
JEL Classification: C32, H43, H54, O47
Suggested Citation: Suggested Citation
Pina, Álvaro and St. Aubyn, Miguel, How Should We Measure the Return on Public Investment in a VAR?. Economics Bulletin, Vol. 8, No. 5, 2006, Available at SSRN: https://ssrn.com/abstract=953848
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