I provide theory and evidence on the relation between public infrastructures and growth. I develop an OLG model of endogenous growth with a production function including both private and public capital, where the latter is the result of investments in infrastructures. With high substitutability between the two forms of capital the process of growth is characterized by a decreasing growth rate converging toward its positive and endogenous steady state level, as in the neoclassical model. When substitutability between public and private capital is lower, cycling dynamics and caothic paths easily emerge. I also extend the model to account for the endogenous choice of the taxation which finances public investments, and show that the politico-economic equilibrium is characterized by suboptimal public investment. Empirical evidence suggests a positive relation between public capital and growth. I also provide evidence of the infrastructural gap between Italy and the main Western countries, and show that the gap between North and South of Italy is not diminished in the last years.

Etro, F. (2007). Infrastrutture e Crescita [Working paper del dipartimento].

Infrastrutture e Crescita

ETRO, FEDERICO
2007

Abstract

I provide theory and evidence on the relation between public infrastructures and growth. I develop an OLG model of endogenous growth with a production function including both private and public capital, where the latter is the result of investments in infrastructures. With high substitutability between the two forms of capital the process of growth is characterized by a decreasing growth rate converging toward its positive and endogenous steady state level, as in the neoclassical model. When substitutability between public and private capital is lower, cycling dynamics and caothic paths easily emerge. I also extend the model to account for the endogenous choice of the taxation which finances public investments, and show that the politico-economic equilibrium is characterized by suboptimal public investment. Empirical evidence suggests a positive relation between public capital and growth. I also provide evidence of the infrastructural gap between Italy and the main Western countries, and show that the gap between North and South of Italy is not diminished in the last years.
Working paper del dipartimento
Scientifica
Infrastrutture; Crescita
English
Etro, F. (2007). Infrastrutture e Crescita [Working paper del dipartimento].
Etro, F
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/23150
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