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Public capital and private sector productivity - a Finnish perspective

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Author Info
Tom Björkroth (Department of Economics and Statistics, Åbo Akademi University, Finland)
Anders Kjellman (Department of Economics and Statistics, Åbo Akademi University, Finland)
Abstract

This paper focuses on the impact of the public sector capital on private sector productivity in Finland. The majority of previous contributions support the public capital hypothesis, i.e. that public capital plays an important role in enhancing private sector productivity. However, the contribution of Tatom (1991a) sheds new light on this issue. He shows that by correcting the previously used models of some of their most serious deficiencies, the impact of public capital is no longer significant for private sector productivity. We have applied Tatom’s approach to Finnish data, and our results are similar to his findings. However, our results concerning the precedence between public capital and private sector output provide some evidence of causation running from public capital to private sector output, i.e. our results indicate that, if correctly targeted, public capital investment could affect private sector performance.

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Publisher Info
Article provided by Finnish Economic Association in its journal Finnish Economic Papers.

Volume (Year): 13 (2000)
Issue (Month): 1 (Spring)
Pages: 28-44
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Handle: RePEc:fep:journl:v:13:y:2000:i:1:p:28-44

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Web page: http://www.taloustieteellinenyhdistys.fi
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Find related papers by JEL classification:
E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
H5 - Public Economics - - National Government Expenditures and Related Policies

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Ratner, Jonathan B., 1983. "Government capital and the production function for U.S. private output," Economics Letters, Elsevier, vol. 13(2-3), pages 213-217. [Downloadable!] (restricted)
  2. Shah, Anwar, 1992. "Dynamics of Public Infrastructure, Industrial Productivity and Profitability," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 28-36, February. [Downloadable!] (restricted)
  3. Munnell, Alicia H, 1992. "Infrastructure Investment and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 189-98, Fall. [Downloadable!] (restricted)
  4. Lynde, Catherine & Richmond, James, 1992. "The Role of Public Capital in Production," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 37-44, February. [Downloadable!] (restricted)
  5. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March. [Downloadable!] (restricted)
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  6. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December. [Downloadable!] (restricted)
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  7. Madden, Gary & Savage, Scott J., 1998. "CEE telecommunications investment and economic growth," Information Economics and Policy, Elsevier, vol. 10(2), pages 173-195, June. [Downloadable!] (restricted)
  8. Blomstrom, Magnus & Lipsey, Robert E & Zejan, Mario, 1996. "Is Fixed Investment the Key to Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 269-76, February. [Downloadable!] (restricted)
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  9. John A. Tatom, 1991. "Public capital and private sector performance," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-15. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jukka Jalava, 2002. "Accounting for Growth and Productivity: Finnish Multi-Factor Productivity 1975-99," Finnish Economic Papers, Finnish Economic Association, vol. 15(2), pages 76-86, Autumn. [Downloadable!]
  2. Pellervo Hamalainen, 2009. "Review of literature on the productivity of public capital," Discussion Papers 55, Aboa Centre for Economics. [Downloadable!]
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