Based on new estimates of public and private capital stocks for 22 OECD countries
we study the dynamic effect of public capital on the real gross domestic product
using a vector autoregression approach. Whereas most former studies put effort on
examining the effects of public capital in a single country, this paper covers a large
set of OECD countries. The results show that public capital has a positive effect on
output in the short-, medium- and long-run in most countries. In countries where the
effect is negative, possible explanations as the different productivities of investments,
crowding out or high growth rates of government debt are analyzed.
