Do states optimize? Public capital and economic growth
AbstractThis paper develops a non-linear theoretical relationship between public capital and economic growth in order to obtain estimates of the growth-maximizing ratio of public capital to private capital. The model is empirically implemented using data on the 48 contiguous U.S. states over the period 1970 to 1990. The empirical results provide evidence that (i) the relationship between public capital and economic growth is non-linear, (ii) the growth-maximizing public capital stock is approximately 60% to 80% as large as the private (tangible) capital stock, and (iii) permanent changes in public capital are associated with permanent changes in economic growth.
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Bibliographic InfoArticle provided by Springer in its journal The Annals of Regional Science.
Volume (Year): 34 (2000)
Issue (Month): 3 ()
Note: Received: October 1998 / Accepted: June 1999
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Other versions of this item:
- David Alan Aschauer, 1997. "Do States Optimize? Public Capital and Economic Growth," Macroeconomics 9711007, EconWPA.
- David Alan Aschauer, 1997. "Do States Optimize?: Public Capital and Economic Growth," Economics Working Paper Archive wp_189, Levy Economics Institute.
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- Alicia H. Munnell, 1990. "Why has productivity growth declined? Productivity and public investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-22.
- Evans, Paul & Karras, Georgios, 1994. "Are Government Activities Productive? Evidence from a Panel of U.S. States," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 1-11, February.
- Randall W. Eberts, 1986. "Estimating the contribution of urban public infrastructure to regional growth," Working Paper 8610, Federal Reserve Bank of Cleveland.
- Alicia H. Munnell, 1990.
"How does public infrastructure affect regional economic performance?,"
Conference Series ; [Proceedings],
Federal Reserve Bank of Boston, vol. 34, pages 69-112.
- Alicia H. Munnell & Leah M. Cook, 1990. "How does public infrastructure affect regional economic performance?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 11-33.
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