Most parts of the Euro area have seen seven years of deep economic crisis. The strategy of tightening the fiscal constraints of the SGP has driven many member states into austerity. In contrast, the golden rule of public investment proposed in this study would be one important element of the...

This paper investigates the impact of fiscal policy on profits using panel data for 19 high-income OECD countries during the period 1975-1999. We estimate a profit equation in which profits depend on a set of fiscal variables. Our empirical method is based on a consistent treatment of the...

It has been widely documented that fiscal policy can promote economic growth, when it is based on an efficient provision of pubic capital. But little work has been done, in Bolivia, in relation to the macroeconomic and sectoral impacts of increasing public investment in infrastructure. This...

The challenge for fiscal policy in Slovakia is to achieve fiscal consolidation in a way which supports the fragile recovery and protects spending on areas which are important for re-embarking on a trajectory of high trend growth and underpinning a catch-up in living standards. While the recently...

This paper examines the link between fiscal rules and public investment both normatively and empirically. We first review the arguments for and against including public investment spending in a fiscal deficit rule. We then seek to assess the determinants of public investment, with a special...

We provide a comprehensive survey of the recent literature on the link between productive government expenditure and economic growth. Starting with the seminal paper of Robert Barro (1990) we show that an understanding of the core results of the ensuing contributions can be gained from the study...

We use a simple endogenous growth model with productive public capital to investigate the degree to which observed fiscal policies in eight OECD countries can account for slowdowns in the growth rates of aggregate labor productivity since 1970. In model simulations, we find that none of the...

This paper contributes to the debate about fiscal multipliers by studying the impacts of government investment in conventional neoclassical growth models. The analysis focuses on two dimensions of fiscal policy that are critical for understanding the effects of government investment:...

This paper develops a quantitative theoretical model for the optimal provision of public capital. We show that the ratio of public to private capital in the U.S. economy since 1925 evolves in a manner that is broadly consistent with an optimal transition path derived from a simple growth model....

Studies of the effect of government spending on unemployment are potentially confounded by reverse causality. To address the endogeneity problem, we exploit variation in a pork-barrel road-building program, and find that higher government expenditure on road-building substantially reduces local...