Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307356 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11426
Publisher: 
CESifo GmbH, Munich
Abstract: 
This paper examines the macroeconomic returns on public and private investments in 18 advanced economies from 1965 to 2019, using a Vector Autoregressive (VAR) approach. We assess whether higher investment levels drive economic growth and explore the interplay between public and private investments, particularly regarding crowding-in and crowding-out effects. A sensitivity analysis, altering the order of investments in the VAR model, tests the robustness of the results and highlights the dynamic relationships between them. The findings show that private investment consistently stimulates growth, while public investment's impact varies by country. The analysis underscores the importance of investment sequencing, suggesting the need for flexible policies and a deeper understanding of investment dynamics. This study contributes to the debate on public investment's role in fostering growth and offers empirical insights for future economic policy and investment strategies.
Subjects: 
public investment
macroeconomic rates of return
crowding-in/out
JEL: 
H54
E01
E22
E62
Document Type: 
Working Paper
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