The paper presents some estimates of the effect of an increase in public investment on GDP and public debt. It also discusses how the public capital stock can be measured and looks at public investment dynamics in the main euro-area economies. Finally, it reviews some regulatory aspects which could slow down public works in Italy.
An increase in public investment can only have a significant macroeconomic impact if the resources are utilized efficiently, monetary conditions are good, and the sovereign risk premium does not rise. Compared with other euro-area countries, there is less public capital in Italy, while public infrastructure takes longer to build. The country would benefit from more accurate cost-benefit analyses, better projects, and more streamlined authorization procedures.
