Estimating the Impact of Public Investment for the United Kingdom: Has the Golden Rule of Public Finance Made a Difference?
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30 mars 2006
- handle: 10670/1.ud82c9
- hal: hal-03462186
- SCIENCESPO: 2441/2681
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info:eu-repo/semantics/altIdentifier/hdl/2441/2681
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Jérôme Creel et al., « Estimating the Impact of Public Investment for the United Kingdom: Has the Golden Rule of Public Finance Made a Difference? », HAL-SHS : économie et finance, ID : 10670/1.ud82c9
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Résumé
This paper uses a SVAR methodology to investigate the effects of public investment on growth, and more specifically, the effects of the introduction of a golden rule. We extend the existing literature by estimating a model of the British economy that takes into account long run factors. This seems necessary when dealing with a multi annual variable like public investment, and its long term effects on public finances through debt accumulation. We find that in such a long run framework investment has significant and permanent positive effects on GDP growth; this result runs counter to most recent literature on the topic, that was limited to a short run specification. We further find, by comparing different subsamples, that the introduction of the golden rule in 1997 strengthened this positive effect of public investment.