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

Dieses Objekt wird bereitgestellt von:
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

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