Forthcoming in Journal of Economic Dynamics and Control

In this paper we study an endogenous growth model, in which public maintenance expenditures a¤ect the depreciation rate of public capital and the latter is subject to congestion. We \u85nd that economies with low congestion in public infrastructure will require a threshold level of public capital maintenance for ongoing growth. We also examine the \u85scal implications of public capital maintenance policies and we \u85nd that the composition of public capital expenditures under congestion is a crucial determinant of optimal and growth-maximizing scal policies. The government can a¤ect the return of public capital by re-allocating public expenditures between newpublic investment and maintenance and hence avoid excessive taxation that is required under increasing congestion. JEL classi\u85cation: O41, H54, E62