José Manuel González-Páramo

Evidence of public spending crowding-out from a panel of OECD countries

The empirical relationship between government spending and private investment is examined, using a panel of 14 OECD countries. The evidence suggests the existence of a significant crowding-in effect of private investment by public investment, through the positive impact of infrastructure on private investment productivity. Moreover, government consumption appears to crowd out private investment. The implications of these results are of foremost importance when it comes to fiscal consolidation. Deficit reductions engineered through cuts in public investment could severely impinge on private capital accumulation and growth prospects.

Public Ownership and Business Performance in the Spanish Manufacturing Sector, 1983-1996

This article presents empirical evidence for the Spanish case on the hypothesis that public ownership may be a determinant of a firm’s performance. Two alternative definitions of efficiency are proposed: relative productivity and profitability. The former tries to approximate the concept of technical or productive efficiency, whereas the latter is associated with allocative or price efficiency. The role of ownership is tested, conditioning for the degree of competition, the financial position of the firm, and labor quality. The data used are a sample of Spanish manufacturing firms for the period 1983-1996. The results show a negative and significant coefficient of the public ownership variable, which would denote that public ownership has a negative effect on efficiency. In addition, the degree of competition seems to have a positive and significant effect on firm’s performance. As for the variables that proxy the degree of financial constraint, the coefficient of the cash flow per unit of capital has a positive and significant sign.