Arbeitspapier
Public investment as commitment
Should public assets such as infrastructure, education, and the environment earn the same return as private investments? The long-term nature of public investments provides commitment to current preferences, which justifies lower than private returns for time-inconsistent decision markers. An institutionalized (i.e., exogenous) rule demanding equalized comparable returns removes the bias and implements the standard cost-benefit requirement. We show that such a stand-alone rule has no general welfare content: it implements Pareto efficiency if and only if preferences are time-consistent. Efficiency requires rules not only for the composition of investments but also for overall savings. Without supplementary rules for savings, accepting lower returns for long-term public assets is welfare improving.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 3330
- Klassifikation
-
Wirtschaft
Project Evaluation; Social Discount Rate
Public Goods
Allocative Efficiency; Cost-Benefit Analysis
Climate; Natural Disasters and Their Management; Global Warming
Macroeconomics: Consumption; Saving; Wealth
- Thema
-
public investments
cost-benefit analysis
inconsistent preferences
Öffentliche Investition
Kosten-Nutzen-Analyse
Zeitkonsistenz
Wohlfahrtseffekt
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Gerlagh, Reyer
Liski, Matti
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2011
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Gerlagh, Reyer
- Liski, Matti
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2011