Does Public Capital Crowd Out Private Capital? Evidence from India

A recent but rapidly growing empirical literature focuses Using data from India, Serven examines this issue on the relationship between public and private capital.empirically by implementing a simple analytical model But for the most part, it ignores the heterogeneity of encompassing two types of public capital.The empirical public investment.results show that in the long run capital for public In many countries, especially in the developing world, infrastructure projects crowds in private capitalother public investment includes not only basic infrastructure types of public capital have the opposite effect.But in the projects but also commercial and industrial projects short run, both kinds of public investment may crowd similar to those undertaken by the private sector.And out private investment.those two types of public investment are likely to have quite different effects on the accumulation of private capital.This papera product of the Macroeconomics and Growth Division, Policy Research Department -is part of a larger effort in the department to understand the determinants of private investment.