Assessment of the impact of the budget deficit on the investment potential of public-private partnership in EU countries

Abstract

The investigation is aimed at identifying the relationship between the scale of the budget deficit and the investment potential of the public-private partnership in France and Italy over the period 2020-2023. The investment potential was reflected by two indicators: the direct investment in the public-private partnership project (billions of euros) and the number of projects that have reached financial closure. As a key explanatory change, the magnitude of the sovereign finance deficit per unit in billions of euros is shown, which ensures a stable interpretation of "a larger deficit means a larger quantity; there are billions of resources". Linear regression with fixed edge effects is methodically designed, which makes it possible to strengthen the steel institutional background from internal conflicts and estimate the marginal influx of an additional one billion Euro deficit to show public-private partnership. To increase reliability, robust standard ablation using the Huber-White approach was used, and duplicate assessments of the skin edge were also performed. Descriptive statistics and correlation analysis are useful as an indicative addition to the causal interpretation of regression coefficients. The results show that the public-private partnership project faces significant challenges in relation to the scale of the deficit in order to attract investments. At the same time, for a number of projects, a stable and statistically variable effect was not revealed: the influx of deficit into the market is close to zero or non-existent. A practical interpretation emphasizes the need to reduce the deficit or, moreover, to protect long-term debts between public-private partnerships in the form of a short-term fiscal squeeze, which is the policy direction for a larger investment scale of public-private partnerships.