Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/70107 
Year of Publication: 
1997
Series/Report no.: 
Reihe Ökonomie / Economics Series No. 47
Publisher: 
Institute for Advanced Studies (IHS), Vienna
Abstract: 
This paper analyzes the impact of public investment on the dynamics of private capital formation in an intertemporal optimizing market-clearing framework. The key feature characterizing the analysis is that the public good is treated as a durable capital good, subject to congestion. We show how in the presence of congestion the effect of government investment on private capital formation involves a tradeoff between the degree of substitution between private and public capital in production and the degree of congestion. Both lump-sum and distortionary tax financing are considered, with this tradeoff being tightened in the latter case.
Subjects: 
congestion
public capital
JEL: 
E62
H41
Document Type: 
Working Paper

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