Is all public capital created equal?

This paper uses a VAR approach to investigate the effects of public investm ent on private-sector performance in the United States. This approach is co nsistent with the argument that the analysis of these effects requires the consideration of dynamic feedbacks among the different variables. Estimatio n results suggest that all types of public investment have a positive effec t on private output. Core infrastructure investment in electric and gas fac ilities, transit systems, and airfields, as well as in sewage and water sup ply systems display the highest rates of return, 16.1% and 9.7%, respective ly, closely followed by investment in educational, hospital, and other publ ic buildings with 8.9%.