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International Aspects of Public Infrastructure Investment.

By Spiros Bougheas, Panicos O. Demetriades and Edgar L.W. Morgenroth

Abstract

Modelling infrastructure as an international public good in a two-country model of trade where each country’s social planner behaves strategically, we show that the equilibrium levels of infrastructure are sub-optimal from a global perspective. Utilising an appropriate econometric framework and data from 16 European countries over the period 1987-95, we find evidence that accords well with the main predictions of our theory. Thus, we are able to offer a plausible theoretical explanation why public capital may be undersupplied, as suggested by previous empirical literature

Publisher: Dept. of Economics, University of Leicester.
Year: 2001
OAI identifier: oai:lra.le.ac.uk:2381/4354

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