Optimal public investment, growth, and consumption : evidence from African countries

Fosu, Augustin Kwasi; Getachew, Yoseph; Ziesemer, Thomas H.W.

dc.contributor.author	Fosu, Augustin Kwasi
dc.contributor.author	Getachew, Yoseph
dc.contributor.author	Ziesemer, Thomas H.W.
dc.date.accessioned	2016-02-17T09:17:23Z
dc.date.issued	2016-12
dc.description.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% 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 8.1% and 9.6% of GDP. Compared with the observed end-of-panel mean value of no more than 7.26%, these estimates suggest that there has been significant public underinvestment in Africa.	en_ZA
dc.description.embargo	2016-07-30
dc.description.librarian	hb2015	en_ZA
dc.description.uri	http://journals.cambridge.org/	en_ZA
dc.identifier.citation	Fosu, AK, Getachew, Y & Ziesemer, THW 2016, 'Optimal public investment, growth, and consumption : evidence from African countries', Macroeconomic Dynamics, vol. 20, no. 8, pp. 1957-1986.	en_ZA
dc.identifier.issn	1365-1005 (print)
dc.identifier.issn	1469-8056 (online)
dc.identifier.other	10.1017/S1365100515000206
dc.identifier.uri	http://hdl.handle.net/2263/51421
dc.language.iso	en	en_ZA
dc.publisher	Cambridge University Press	en_ZA
dc.rights	© 2015 Cambridge University Press	en_ZA
dc.subject	Public investment	en_ZA
dc.subject	Economic growth	en_ZA
dc.subject	Nonlinearity	en_ZA
dc.title	Optimal public investment, growth, and consumption : evidence from African countries	en_ZA
dc.type	Postprint Article	en_ZA