Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314673 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 11634
Publisher: 
CESifo GmbH, Munich
Abstract: 
We assess the relevance of macro rates of return on time-varying fiscal and external sustainability. First, we compute the total public and private macroeconomic rates of return for 16 OECD countries from 1980 to 2022. We find that there is a positive impact of higher investment returns on stimulating higher aggregate demand, therefore resulting in higher tax revenues, which in turn lead to greater fiscal sustainability and more external sustainability by lowering the need for foreign capital and imports of goods and services. Accordingly, we demonstrate that macroeconomic rates of return of both public and private investment positively contribute to fiscal sustainability and that public sector investment also displays the same positive effect on external sustainability.
Subjects: 
macroeconomic rates of return
fiscal sustainability
external sustainability
time-varying
public investment
private investment
JEL: 
E22
F41
H54
H61
Document Type: 
Working Paper
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