We investigate the risk that the Stability and Growth Pact may act as a constraint on the fiscal policy of EMU Member States in three respects: a) discretionary counter-cyclical policy which finds a limit in the 3 per cent of GDP threshold set for nominal deficit; b) automatic stabilisers whose...

A new method of empirically computing the macroeconomic returns to public investment is proposed. Pereira's (2000) technique is modified, and a measure which accounts for both public and private investment costs is suggested. An empirical application to US data shows that differences between...

Pereira’s (2000) method of computing the return on public investment in a VAR is extended. A new return measure which accounts for public and private costs is proposed. An application to US data shows non-trivial differences between alternative return rates.