Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099783 | Journal of Economic Dynamics and Control | 2008 | 20 Pages |
Abstract
In this paper we study an endogenous growth model, in which public maintenance expenditures affect the depreciation rate of public capital and the latter is subject to congestion. We find that economies with low congestion in public infrastructure will require a threshold level of public capital maintenance for ongoing growth. We also examine the fiscal implications of public capital maintenance policies and we find that the composition of public capital expenditures under congestion is a crucial determinant of optimal and growth-maximizing fiscal policies. The government can affect the return of public capital by re-allocating public expenditures between 'new' public investment and maintenance and hence avoid excessive taxation that is required under increasing congestion.
Keywords
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Evangelos V. Dioikitopoulos, Sarantis Kalyvitis,