Template-type: ReDif-Paper 1.0
Author-Name: Kwasi Fosu A. 
Author-Name: Getachew Y.Y. 
Author-Name: Ziesemer T.H.W. 
Author-workplace-name: UNU-MERIT
Title: Optimal public investment, growth, and consumption: Fresh evidence from African countries
Abstract: This paper develops a model positing a nonlinear relationship between  public investment and growth. The model is then applied to a panel of  African countries using nonlinear estimating procedures. The  growth-maximizing level of public investment is estimated at about 10  percent of GDP based on System GMM estimation. The paper further runs  simulations, obtaining the constant optimal public investment share that  maximizes the sum of discounted consumption as between 81 percent and  96 percent of GDP. Compared with the observed end-of-panel mean value  of no more than 726 percent, these estimates suggest that there has  been significant public under-investment in Africa.
Keywords: Public Goods; Macroeconomic Analyses of Economic Development; One, Two, and Multisector Growth Models; Economywide Country Studies: Africa; 
Classification-JEL: O11; O41; O55; H41; .
Series:  Working Papers
Creation-Date: 2014
Number: 057
File-URL: http://pub.maastrichtuniversity.nl/41a5d191-ae92-45f2-8073-7da8a2e051d3
File-Format: application/pdf
File-Size: 481019
Handle: RePEc:unm:unumer:2014057