Arbeitspapier
Delays in Public Goods
In this paper, we analyze the consequences of delays and cost overruns typically associated with the provision of public infrastructure in the context of a growing economy. Our results indicate that uncertainty about the arrival of public capital can more than offset its positive spillovers for private-sector productivity. In a decentralized economy, unanticipated delays in the provision of public capital generate too much consumption and too little private investment relative to the first-best optimum. The characterization of the first-best optimum is also affected: facing delays in the arrival of public goods, a social planner allocates more resources to private investment and less to consumption relative to the first-best outcome in the canonical model (without delays). The presence of delays also lowers equilibrium growth, and leads to a diverging growth path relative to that implied by the canonical model. This suggests that delays in public capital provision may be a potential determinant of cross-country differences in income and economic growth.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 6341
- Classification
-
Wirtschaft
Optimization Techniques; Programming Models; Dynamic Analysis
Fiscal Policy
Public Goods
One, Two, and Multisector Growth Models
- Subject
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public goods
delays
time overrun
cost overrun
implementation lags
fiscal policy
economic growth
- Event
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Geistige Schöpfung
- (who)
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Chatterjee, Santanu
Posch, Olaf
Wesselbaum, Dennis
- Event
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Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
-
2017
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Chatterjee, Santanu
- Posch, Olaf
- Wesselbaum, Dennis
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2017
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