The relationship between public and private capital in emerging Europe

Monastiriotis, Vassilis ORCID: 0000-0003-3709-3119 and Randjelovic, Sasa (2023) The relationship between public and private capital in emerging Europe. Eastern European Economics. ISSN 0012-8775

Text (Public – Private Capital Relationship in Emerging Europe) - Accepted Version Download (737kB)

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Abstract

The aim of this paper to evaluate the relationship between public and private capital formation in 16 economies from Central Eastern and South Eastern Europe by applying panel-cointegration methods to 2000–2017 data. We find a positive public-private capital formation nexus both in the short and the long-run, with pro-cyclicality of private capital formation and negative relevance of the user costs of capital. The results imply that expansionary public investment policy may be effective in boosting private investment both in the short and the long-run, if fit into a financially sustainable framework that limits negative impact of the user cost of capital.

Item Type:	Article
Additional Information:	© 2023 Taylor & Francis Group, LLC.
Divisions:	European Institute
Subjects:	J Political Science H Social Sciences > HB Economic Theory
JEL classification:	E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E22 - Capital; Investment (including Inventories); Capacity H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures; Other Public Investment and Capital Stock O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O16 - Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P33 - International Trade, Finance, Investment, and Aid
Date Deposited:	27 Feb 2023 14:18
Last Modified:	12 Dec 2024 03:36
URI:	http://eprints.lse.ac.uk/id/eprint/118277

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