Optimal public investment, growth, and consumption: Evidence from African countries
Augustin Fosu (),
Yoseph Getachew and
Thomas Ziesemer ()
No 2011-22, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford
Abstract:
How much does public capital matter for economic growth? How large should it be? This paper attempts to answer these questions, taking the case of SSA countries. It develops and estimates a model that posits a nonlinear relationship between public investment and growth, to determine the growth-maximizing public investment GDP share. It empirically also accounts for the crowding-in and crowding-out effects between public and private investment, with equations estimated separately and simultaneously, using System GMM. The paper further runs simulation and examines the public investment GDP share that maximizes consumption. This is estimated to be between 8.4 percent and 11.0 percent. The results from estimating the growth model are in the middle of this range, which is larger than the observed value of 7.2 percent at the end of the sample period. These outcomes suggest that, on average, there has been public under-investment in Africa, contrary to previous findings.
Keywords: Public investment; Economic Growth; Nonlinearity (search for similar items in EconPapers)
JEL-codes: H4 O4 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-afr, nep-fdg and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)
Downloads: (external link)
https://ora.ox.ac.uk/objects/uuid:76b09da3-d575-4362-820d-ac716b3f4a7e (application/pdf)
Related works:
Journal Article: OPTIMAL PUBLIC INVESTMENT, GROWTH, AND CONSUMPTION: EVIDENCE FROM AFRICAN COUNTRIES (2016)
Working Paper: Optimal public investment, growth and consumption: evidence from African countries (2012)
Working Paper: Optimal Public Investment, Growth, and Consumption: Evidence from African Countries (2012)
Working Paper: Optimal public investment, growth, and consumption: Evidence from African countries (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:2011-22
Access Statistics for this paper
More papers in CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by Julia Coffey ().