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After Maastricht: Public Investment, Economic Integration, and International Capital Mobility
Working paper
Richard Clarida, Ronald Findlay
September 1993 |
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| Economists have traditionally analyzed European integration by studying the successive relaxation of impediments to the free exchange of goods and factors among the member nations of the community. This paper approaches the subject of European integration emphasizing the role of the state as a provider of public goods, including productive infrastructure as well as public services. The authors use a simple model to show among other things that the optimal public capital stock is higher in a world with capital mobility, and that all of the gains from the additional public capital stock accrue to labor. Thus, as a result of economic integration, capital mobility increases and the benefits of public capital in one nation "spill over" to others. |
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| Last updated on: 3/27/2007 |
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