Congestion and Public Capital

Fisher, Walter H. and Turnovsky, Stephen J. (July 1997) Congestion and Public Capital. Former Series > Working Paper Series > IHS Economics Series 47


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Abstract: This paper analyzes the impact of public investment on the dynamics of private capital formation in an intertemporal optimizing market-clearing framework. The key feature characterizing the analysis is that the public good is treated as a durable capital good, subject to congestion. We show how in the presence of congestion the effect of government investment on private capital formation involves a tradeoff between the degree of substitution between private and public capital in production and the degree of congestion. Both lump-sum and distortionary tax financing are considered, with this tradeoff being tightened in the latter case.;

Item Type: IHS Series
Keywords: 'Congestion' 'Public Capital'
Classification Codes (e.g. JEL): E62, H41
Date Deposited: 26 Sep 2014 10:36
Last Modified: 26 Sep 2019 16:16

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