Title: Does public capital crowd out private capital?
Abstract: The central focus of this paper is on the question: does higher public capital accumulation ‘crowd out’ private investment? Higher public capital accumulation raises the national investment rate above the level chosen by rational agents and induces an ex ante crowding out of private investment. However, an increase in the public capital stock also raises the return to private capital, which crowds in private capital accumulation. Empirical evidence on the net effect of these opposing forces is presented.