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Public investment as a driver of private investment

Completed Project

Project Management

Dr. Claus Michelsen, Dr. Marius Clemens

Project Period

September 1, 2019 - February 28, 2020

Commissioned by

German Federal Ministry of Finance

The project examines the transmission channels between public investment and private investment activity in Germany, estimating the aggregate relationship with econometric models, focusing on the specific effects of individual investment categories (e.g., R & D investment) and areas of responsibility (e.g., Defense, Education, Environment). In view of possible barriers to investment, another objective is to assess the industry-specific effects of public investment.

In addition, further insights into actual and future needs for modernization, will be provided, especially in the housing, energy and environmental protection, education, R&D and transport infrastructure. They will be based on the results of empirical studies using a structural macroeconomic simulation model with the aim to estimate the impact of public investment in modernization on private investment in different scenarios (such as interest rate policy, “debt brake”, demographic trends).