The interaction of public and private capital: a study of 20 OECD members

This article addresses the interaction of public and private capital stocks. We show for most developed countries that there is a long-term equilibrium relation between public and private capital. We find that imbalances in the relation of public and private capital are most likely to be corrected t...

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Bibliographic Details
Published in:Applied economics 2012-02, Vol.44 (6), p.739-764
Main Author: Hunt, Colin
Format: Article
Language:English
Subjects:
Capital measurement
Capital stock
Cross-national analysis
Equilibrium
Investment analysis
Investments
Manycountries
Private investment
Public finance
Public investment
Studies
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Summary:This article addresses the interaction of public and private capital stocks. We show for most developed countries that there is a long-term equilibrium relation between public and private capital. We find that imbalances in the relation of public and private capital are most likely to be corrected through a public capital adjustment. Private capital tends towards weak exogeneity. The evidence presented suggests that public investment is more likely to be enticed by private investment rather than serve to crowd out private investment activity.
ISSN:0003-6846
1466-4283
DOI:10.1080/00036846.2010.522523