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Has the Golden Rule of Public Finance Made a difference in the UK

Abstract : This paper uses the SVAR methodology to investigate the effects of public investment on growth, and more specifically, the effects of the introduction of a golden rule of public finance. We extend the existing literature by estimating a model of the British economy that takes into account long run factors such as public debt accumulation. We find that in such a long run framework, public investment has a significant and permanently positive effect on GDP growth; this result runs counter to the most recent literature on the topic that was limited to a short run specification. We further find, by comparing different subsamples, that the introduction of the golden rule in 1997 strengthened the positive effect of public investment.
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Submitted on : Thursday, April 3, 2014 - 8:07:11 PM
Last modification on : Monday, March 21, 2022 - 2:48:11 PM
Long-term archiving on: : Thursday, July 3, 2014 - 7:30:40 PM


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  • HAL Id : hal-00972843, version 1
  • SCIENCESPO : 2441/1181



Jérôme Creel, Paola Veroni, Francesco Saraceno. Has the Golden Rule of Public Finance Made a difference in the UK. 2007. ⟨hal-00972843⟩



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