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Macroeconomic Rates Of Return Of Public And Private Investment: Crowding‐In And Crowding‐Out Effects
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Macroeconomic Rates Of Return Of Public And Private Investment: Crowding‐In And Crowding‐Out Effects

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  • ANTÓNIO AFONSO
  • MIGUEL ST. AUBYN

Abstract

Using annual data from 17 developed economies, we evaluate the macroeconomic effects of public and private investment through a five‐variable vector autoregression. From impulse response functions, we assess the extent of crowding‐in or crowding‐out of both components of investment. We also compute the associated macroeconomic rates of return of public and private investment for each country. The results show the existence of positive effects of public investment and private investment on output. On the other hand, the crowding‐in effects of public investment on private investment vary across countries, while the crowding‐in effect of private investment on public investment is more generalized.

Suggested Citation

  • António Afonso & Miguel St. Aubyn, 2009. "Macroeconomic Rates Of Return Of Public And Private Investment: Crowding‐In And Crowding‐Out Effects," Manchester School, University of Manchester, vol. 77(s1), pages 21-39, September.
    • Handle: RePEc:bla:manchs:v:77:y:2009:i:s1:p:21-39
    DOI: 10.1111/j.1467-9957.2009.02117.x
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    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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