Several governments set the social discount rate using a Ramsey Rule that treats pure time preference as a separate parameter. Standard arguments for declining discount rates rest on uncertainty about growth or preferences, or on aggregation across people who disagree about the rate. We add a different reason: pure time preference may itself be falling over time. Real interest rates have declined for centuries, even as growth has risen. In a Ramsey framework, that pattern points to a falling pure-time-preference component. One structural explanation is selection towards patience: if patience differs across people and persists across generations, the population-weighted distribution shifts, so that the value of pure time preference used to represent society’s impatience declines not only across horizons but across generations. We illustrate with the UK Green Book, which is the most transparent Ramsey-based framework currently in use and under active review.

The question of public investment has recently returned to the top of the EU policymaking agenda, signalling a shift away from austerity-era policies. Scholars have celebrated this renewed centrality of state investment as a kind of Keynesian revival, catalysed by the compounded crisis of the pandemic, climate change, and war. However, the specifics of this investment turn have seldom been analysed in any detail. We do so here using a critical lens, tracing the distributional and practical consequences of this turn in the evolution of EU governance over the past two decades. We argue that the particular investment paradigm which has emerged during this period favours supply-side interventions and sidelines alternatives within the framework of a discourse based on a distinction between growth-enhancing investment and unproductive consumption spending. We highlight how this analytically weak distinction serves to legitimise a supply-side strategy that limits the potentially transformative role of the fiscal state. Our findings reveal how this narrow approach to investment limits the state’s role to one of a facilitator of private capital, operating within existing fiscal constraints.

We present simulation results of the macroeconomic effects of a green European Union (EU) public investment fund for the euro area using the macroeconometric simulation model National Institute Global Econometric Model. Our results show considerable negative gross domestic product (GDP) effects together with inflationary effects from CO2 taxation alone. Accounting for climate change and the corresponding long-term damage to GDP, however, our results show that not acting on climate change now causes far more severe damages in the future. An EU investment fund would significantly cushion the negative transitory GDP effects. Finally, our results highlight the importance of cooperation such that climate change policies are implemented on a global level.

Public investment in the United Kingdom has been persistently low compared to both its post-war levels and other OECD countries, and this shortfall has been widely seen as one of the causes of weak UK productivity growth since the global financial crisis. Although the Labour government elected in 2024 prioritised growth via higher public and private investment, its self-imposed fiscal rules have limited public investment, sparking debate and research on the UK fiscal framework. This Special Issue brings together recent research examining fiscal frameworks and includes contributions from academic and policy-oriented researchers and leading experts on this issue.

This paper argues that the current UK fiscal framework fails to support growth-enhancing public investment while inadequately restraining debt accumulation. Frequent changes to fiscal rules, their short horizon and incentives that prioritise current spending over long-term investment have undermined economic stability and productivity growth. We propose a reformed framework centred on clear fiscal objectives, enhanced OBR analysis of long-run sustainability and a target for the primary surplus consistent with maintaining stable debt. A supplementary investment rule would ensure adequate public capital formation. Together, these reforms aim to raise productivity, support resilience and improve living standards.

Using the Irish experience of public investment and fiscal policy management over the last 25 years, we identify five core lessons. These concern (1) the need for sustained investment effort even when facing tough choices regarding public expenditure, (2) the importance of assessing the adequacy of public capital, (3) counter-cyclicality as an important principle of public investment, (4) crowding-in private investment and (5) the challenge for public investment caused by longer-term challenges such as the necessary climate transition. We also propose two overarching design suggestions for fiscal policy and investment management frameworks.

The NIH-Moderna mRNA COVID-19 vaccine’s steep price increase raises concerns that this will be the new anchor for continued price hikes and underscores the need for upstream government intervention to enable greater accountability and stewardship of public biomedical research investment.

In response to the recession brought about by the COVID-19 pandemic, EU-wide macroeconomic policy has launched an unprecedented coordinated fiscal expansion across the EU (Next Generation EU or NGEU), financed by issuing common debt. Given NGEU’s nature, it is essential to take fiscal spillovers into consideration when assessing the overall macroeconomic effects of this fiscal expansion. We quantify the effects of the additional public investment for all Member States in a rich macro-model with a trade structure. Our model suggests that, on average, GDP effects are around one-third larger when explicitly accounting for the spillover effects from individual-country measures. For small open economies with smaller NGEU allocations, spillover effects account for the bulk of the GDP impact. We also quantify key transmission channels.

Viruses and related graft-transmissible pathogens cause diseases that cost the grape industry billions of dollars annually if left uncontrolled. The National Clean Plant Network (NCPN), a USDA Farm Bill program, is an organization of clean plant centers that produce and maintain virus-tested foundation vine stocks and distribute propagation material derived thereof to nurseries and growers to minimize the introduction of viruses and virus-like diseases into the vineyard. Foundation Plant Services (FPS) is the major NCPN-grapes center. We examined the economic impacts of public investments in FPS from 2006 to 2019. By focusing on grapevine leafroll disease, our analyses revealed a benefit-cost ratio ranging from 22:1 to 96:1, with a 5% and a 20% disease infection rates in commercial vineyards, respectively. A welfare analysis was consistent with grape growers and nurseries capturing most (64–98%) of the benefits from adopting clean planting material compared with winemakers and other actors in the downstream wine supply chain system. This study provided new insights into the returns to public investments in a clean plant center and documented strong financial incentives for higher adoption of clean vines derived from virus-tested stocks, while justifying continued support of NCPN centers from public and private sectors.

This paper deals with public investment in High-Speed Rail (HSR) infrastructure and tries to understand the economic rationale for allocating public money to the construction of new HSR lines. The examination of data on costs and demand shows that the case for investing in HSR requires several conditions to be met: an ex ante high volume of traffic in the corridor where the new lines are built, significant time savings, high average willingness of potential users to pay, the release of capacity in the conventional rail network and airports. On the contrary, net environmental benefits seem to be insignificant in influencing the social desirability of HSR investment. This paper discusses, within a cost-benefit analysis framework, under which conditions the expected benefits could justify the investment in HSR projects.

Socioeconomic evaluation of a public investment helps to understand its value for the community, and it also improves an investment by analyzing its different components, and the risks inherent in its completion. The Act of 31 December 2012 about Public Finance Planning makes it mandatory in France for project sponsors to conduct an ex-ante socioeconomic evaluation of all public civil investments made by the State and its public institutions. An independent counter-expert assessment of the ex-ante socioeconomic evaluation is conducted for the largest projects. A permanent committee of experts has been established to specify the methodological rules for socioeconomic evaluation and define the studies and research necessary.

Increasingly, decentralization is being adopted by countries in which assumptions made by formal models of decentralization, such as electoral accountability and population mobility, fail to hold. How does decentralization affect public service delivery in such contexts? The authors exploit the partial rollout of decentralization in the autocratic context of Ethiopia and use a spatial regression discontinuity design to identify its effects. Decentralization improves delivery of productive services, specifically, agricultural services, but has no effect on social services, specifically, drinking water services. This finding is consistent with a model in which local leaders have superior information about the public investments that will deliver the greatest returns and they are incentivized by decentralization to maximize citizens’ production—on which rents depend—rather than citizens’ utility. These findings shed light on nonelectoral mechanisms through which decentralization affects public goods provision and help to explain decentralization’s mixed effects in many nondemocratic settings.

Why do governments in developing economies favor roads rather than schools in public investment scale-ups? We study this question using a dynamic general equilibrium model and argue that the different pace at which roads and schools contribute to economic growth, public debt intolerance, and political myopia are central to this decision. In a thought experiment with a large return differential in favor of schools, a benevolent government would intuitively devote the majority of an investment scale-up to them. However, the fraction of schools chosen by the government falls with increasing levels of debt intolerance and political myopia. In particular, political myopia is a meaningful explanation for the observed result to the extent that an extremely myopic government would not invest in schools at all.

We evaluate the global macroeconomic effects of cross-country-coordinated fiscal and monetary policies to counterbalance secular stagnation by simulating a five-region New Keynesian model of the world economy, calibrated to the United States (US), the euro area, Japan, China, and the rest of the world. The model includes investment in research and development (R&D) as a key factor affecting global growth. Our main findings are as follows. First, unfavorable technology developments may have played a nontrivial role in the global growth slowdown. Second, secular stagnation can be more effectively counterbalanced by coordinating global fiscal and monetary measures encouraging R&D accumulation. Third, these coordinated measures provide a larger welfare gain relative to a unilateral fiscal expansion.

There is a strong case for boosting public investment in many countries based on identified country-specific structural weaknesses and the relatively low levels of such investment. This paper analyses the potential macroeconomic benefits of increased public investment using simulations on NiGEM. The results suggest that the supply-side benefits from raising potential output are likely to lead to more favourable macroeconomic outcomes than those from using many other standard fiscal instruments, although it takes many years for the full effect on potential output to accumulate. Variant model simulations also suggest that a fiscal stimulus will be more effective in the short term the less it is offset by monetary policy, making well-targeted policy initiatives especially effective when policy interest rates are at the zero lower bound. Globalisation implies that spillover effects from collective action are larger than in the past, boosting multipliers relative to the case where countries take individual action, particularly in the first two years after the policy change. Such spillovers are likely to be particularly important in small open European economies, especially those strongly integrated in European value chains.