de Jong, Jasper, Ferdinandusse, Marien, Funda, Josip, Vetlov, Igor, (2017), ” The effect of public investment in Europe: a model-based assessment”, ECB Working Paper Series No 2021, February
Public investment in Europe has significantly declined since the crisis, although developments are heterogeneous across countries. This has led to calls for stimulating public investment in an environment of low borrowing costs for governments, weak economic growth and monetary policy at the lower bound. Against this background, this paper assesses the output effects of public capital and investments and discusses the importance of various economic mechanisms determining the transmission of public investment shocks.
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