How Should We Measure the Return on Public Investment in a VAR?

Economics Bulletin, Vol. 8, No. 5, 2006

Posted: 27 Dec 2006

See all articles by Álvaro Pina

Álvaro Pina

Technical University of Lisbon (UTL) - Department of Economics; UECE - Research Unit on Complexity in Economics

Miguel St. Aubyn

Technical University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics)

Abstract

A new method of empirically computing the macroeconomic returns to public investment is proposed. Pereira's (2000) technique is modified, and a measure which accounts for both public and private investment costs is suggested. An empirical application to US data shows that differences between alternative ways of measuring rates of return are non-trivial - taking into consideration the full investment effort halves estimated returns when partial public costs only are considered.

Keywords: public investment, rate of return, VAR

JEL Classification: C32, H43, H54, O47

Suggested Citation

Pina, Álvaro and St. Aubyn, Miguel, How Should We Measure the Return on Public Investment in a VAR?. Economics Bulletin, Vol. 8, No. 5, 2006, Available at SSRN: https://ssrn.com/abstract=953848

Álvaro Pina

Technical University of Lisbon (UTL) - Department of Economics ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal

UECE - Research Unit on Complexity in Economics ( email )

ISEG/UTL, Rua Miguel Lupi 20
Lisboa, 1249-078
Portugal

Miguel St. Aubyn (Contact Author)

Technical University of Lisbon - ISEG (School of Economics and Management) ( email )

Rua do Quelhas, 6
1200-071 Lisboa
Portugal
+351 21 392 5987 (Phone)

HOME PAGE: http://www.iseg.utl.pt/~mstaubyn

UECE (Research Unit on Complexity and Economics)

ISEG/UTL, Rua Miguel Lupi 20
1249-078 Lisboa
Portugal
+351-213 925 912 (Phone)
+351-213 971 196 (Fax)

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