Dynamic analysis on maintenance in public capital

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This study develops an infrastructure-led growth model with choosing the durability of public capital. First, the theoretical study show that a rise in the share of public investment does not always require the neglect of maintenance of public capital, whereas a large amount of public capital stock requires low level of the durability. Second, the study demonstrates that optimally chosen durability is correlated with tax rate. The second result supports ad hoc setting of endogenous durability by Rioja (2003) and Kalaitzidakis and Kalyvitis (2004). These results are summarized in "Dynamic analysis on public investment policies in an endogenous growth model" (Studies in Applied Economics 3, pp.157-165, 2009 etc).