Should Public Capital Be Subsidized or Provided?

In an endogenous-growth model, we consider alternative ways of providing public capital using distortionary taxes. We show that if the government provides the good, the resulting growth rate and welfare may or may not be higher than under laissez-faire. By contrast, if the government subsidizes private providers, not only are growth and welfare higher than under public provision, they are also unambiguously higher than under laissez-faire.

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Year of publication:	1999-09
Authors:	Devarajan, Shantayanan ; Xie, Danyang ; Zou, Heng-fu
Institutions:	China Economics and Management Academy, Central University of Finance and Economics (CUFE)

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Extent:	application/pdf
Series:	CEMA Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Published in Journal of Monetary Economics, Volume 41, Issue 2, 27 February 1998, Pages 319-331 Number 75 22 pages
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009225890