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Empirical Economics

, Volume 26, Issue 2, pp 429–446 | Cite as

Dynamic effects of public investment: Vector autoregressive evidence from six industrialized countries

  • Stefan Mittnik
  • Thorsten Neumann

Abstract.

We analyze the dynamic relationship between public investment and output. Whereas existing empirical studies on the effects of public capital typically rely on single-equation models of the private sector, we investigate the role of public investment in an economy by examining impulse responses derived from vector autoregressions. Using data from six industrial countries, we specifically examine the following questions: does higher public investment lead to GDP increases; is there reverse causation from output to public investment; and what are the effects of expenditure-neutral budget shifts from public consumption to public investment.

Key words: Fiscal Policy Public Investment Vector Autoregression Impulse Response Analysis 
JEL classification: H54 E62 C32 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2001

Authors and Affiliations

  • Stefan Mittnik
    • 1
  • Thorsten Neumann
    • 1
  1. 1.Institute of Statistics and Econometrics, Christian Albrechts University at Kiel, Olshausenstr. 40, D-24098 Kiel, Germany (e-mail mittnik@stat-econ.uni-kiel.de)DE

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