Report
How long does it take for increases in public spending on healthcare, education and research and development to be self-financing?
Of all public spending, only three types seem to have a positive effect on productivity gains and the employment rate, i.e. on potential growth. Based on a comparison of OECD countries, we try to quantify this effect, and we therefore seek to determine how long it takes for an increase in public spending on healthcare, education or R&D to raise the level of production sufficiently for the additional tax revenues to cover the additional public spending (which is then self-financing). We find that this self-financing of additional public spending is obtained after: 10 years for healthcare spending; 8 years for education spending; 2 years for R&D spending.
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Natixis
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Patrick Artus
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