A calibration of the output elasticity of public capital

Carmen D. Ã lvarez-Albelo ()
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Carmen D. Ã lvarez-Albelo: Universidad de La Laguna

Economics Bulletin, 2018, vol. 38, issue 2, 761-771

Abstract: The empirical literature is far from having reached a consensus on the output elasticity of public capital. This lack of consensus continues to hinder quantitative general equilibrium analysis and fiscal policy study. Therefore, this paper aims to clarify the order of magnitude of this elasticity by performing a calibration for 14 European Union (EU) countries in the period 1980-2014. To do this, a growth model is developed based on the theoretical and empirical literature on public capital. The calibrated elasticity ranges between 0.05 and 0.13. These results are in line with the panel estimates for 6 EU countries in the period 1969-2002 by Creel and Poilon (2008).

Keywords: Public capital; output elasticity; calibration (search for similar items in EconPapers)
JEL-codes: A1 H5 (search for similar items in EconPapers)
Date: 2018-04-15
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