Template-type: ReDIF-Paper 1.0
Author-Name: Kwasi Fosu, A. 
Author-Workplace-Name: Institute of Statistical, Social and Economic 
	 Research (ISSER), University of Ghana 
Author-Name: Getachew, Y.
Author-Workplace-Name: Department of Economics, University of Pretoria
Author-Name: Ziesemer, T.
Author-Email: ziesemer@merit.unu.edu
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.
Classification-JEL: O11, O41, O55, H41
Keywords: Economic growth, Economic develeopment, Consumption, Public investment, 
	 Public expenditure, Africa, Panel data, GMM
Series: UNU-MERIT Working Papers
Creation-Date: 20140631
Number: 2014-057
File-URL: https://unu-merit.nl/publications/wppdf/2014/wp2014-057.pdf
File-Format: application/pdf
File-Size: 468 Kb
Handle: RePEc:unm:unumer:2014057