On the optimal level of public inputs.

This paper studies the optimal level of public inputs under two different tax settings. With this aim, we adapt the approach by Gronberg and Liu (2001) to the case of productivity-enhancing public spending. We find that it is not analytically clear whether the first-best level of public spending exceeds the second-best level. After taking account the type of public input, a wide numerical simulation has been carried out. We obtain that the second-best level is always below the first-best level but the criterion by Gronberg and Liu has to be qualified.Second best, excess burden, public input.

Optimization in non-standard problems. An application to the provision of public inputs

This paper describes a new method for solving non-standard constrained optimization problems for which standard methodologies do not work properly. Our method (the Rational Iterative Multisection -RIM- algorithm) consists of different stages that can be interpreted as different requirements of precision by obtaining the optimal solution. We have performed an application of RIM method to the case of public inputs provision. We prove that the RIM approach and comparable standard methodologies achieve the same results with regular optimization problems while the RIM algorithm takes advantage over them when facing non-standard optimization problems.direct search, constrained optimization, multisection, optimal taxation, public input.

How sensitive is the provision of public inputs to specifications?

This paper studies the sensitivity of provision of public inputs to changes in the specification of technology and consumer preferences. We consider a simple model in which the government, with recourse to three different tax settings (a lump-sum tax, a tax on labour and a tax on economic profit), provides firms with certain productive services. We focus on the numerical results coming from the government optimization problem. We look at several specific cases in which the returns to scale in the production function emerges as a critical issue. Our …findings also address the impact of changes in output elasticity, in consumer preferences and in the number of households on the levels of public input and utility.firm-augmenting public input, factor-augmenting public input, optimal provision