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Finanzierungsformen und Opportunitätskosten öffentlicher Investitionen / Public Debt and Opportunity Costs of Public Investment

Author

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  • Kellermann Kersten

    (Hadlaubstr. 26, CH-8044 Zürich, Switzerland)

Abstract

In the paper we discuss investment- and financing rules for the public sector to maximize a social welfare function. We show, that in the long run the opportunity costs of credit financed public investments exceed the opportunity costs of tax financed public investments. Financing public investment by credits is only justified if a considerable under-supply of public capital exist initially. We illustrate this result by a simulation. Nevertheless, it can be shown that the German government chanced its financing policy in the 70s from tax to credit financing.

Suggested Citation

  • Kellermann Kersten, 2004. "Finanzierungsformen und Opportunitätskosten öffentlicher Investitionen / Public Debt and Opportunity Costs of Public Investment," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 224(4), pages 471-487, August.
    • Handle: RePEc:jns:jbstat:v:224:y:2004:i:4:p:471-487
    DOI: 10.1515/jbnst-2004-0405
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    References listed on IDEAS

    as
    1. Marchand, Maurice & Pestieau, Pierre, 1984. "Discount rates and shadow prices for public investment," Journal of Public Economics, Elsevier, vol. 24(2), pages 153-169, July.
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    7. Kersten Kellermann, 2000. "Ist die Kreditfinanzierung öffentlicher Investitionen zu rechtfertigen?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 136(II), pages 161-180, June.
    8. Halkin, Hubert, 1974. "Necessary Conditions for Optimal Control Problems with Infinite Horizons," Econometrica, Econometric Society, vol. 42(2), pages 267-272, March.
    9. MARCHAND, Maurice & PESTIEAU, Pierre, 1984. "Discount rates and shadow prices for public investment," LIDAM Reprints CORE 586, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    11. Andel, Norbert, 1998. "Wie über Vermögensveräußerungen der Zweck des Art. 115 Abs. 1 Satz 2 Halbsatz 1 GG vereitelt wird," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW - Leibniz Information Centre for Economics, vol. 78(8), pages 457-459.
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    Cited by:

    1. Kellermann, Kersten, 2007. "Debt financing of public investment: On a popular misinterpretation of "the golden rule of public sector borrowing"," European Journal of Political Economy, Elsevier, vol. 23(4), pages 1088-1104, December.

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