Munich Personal RePEc Archive

The impact of public investment in Sweden: A VAR approach.

Brinca, Pedro (2006): The impact of public investment in Sweden: A VAR approach.

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Abstract

The traditional approach towards analyzing the impact of public investment has been through including public capital as a third input factor in a Solow-model production function. Nonetheless, such approach implies several problems both at the theoretical and empirical level. Given such problems, econometric models that require as few theoretic assumptions as possible become important. It is in this framework that the Vector Autoregressive model is introduced and explained. An application to the Swedish economy is consequently conduced as it is interesting to verify the impact of public investment in a country known for its comparably large public sector.

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