Advanced Search
MyIDEAS: Login to save this paper or follow this series

A Model of State Infrastructure with Decentralized Public Agents: Theory and Evidence

Contents:

Author Info

  • Raul Barreto

    ()
    (School of Economics, University of Adelaide, Australia)

Abstract

The imperative of the state, irrespective of its organization, is to provide law and order, contract enforcement, and property rights. The government provides the foundation for markets to function and for society to prosper. A common thread in any government is that, for a given society, the state holds a monopoly over most of its services. Although the state may choose not to exploit this market power, the public agents that represent the state within the aggregate production process, necessarily will. The following paper presents a macroeconomic framework that explicitly considers the local monopoly power of public agents. In the context of a representative agent model, I consider a private sector production function versus a public sector production function in which both sectors compete over labor and capital. Estimates are made of the productivity of private versus public capital, of private versus public labor, and of public infrastructure within the private sector production function. The theoretical implications of decentralized public agents are then analyzed within an endogenous growth framework. The results suggest that the elasticity of public infrastructure is significantly lower than previous estimates. They also confirm that the elasticity of private infrastructure is country specific. The theoretical results suggest that decentralization of public agents which, intuitively is greater in less developed countries than industrialized ones, is associated with steeper growth paths that lead to lower steady state capital labor ratios and per capita consumption levels. This implies that shocks to less developed countries have more dramatic effects but shorter life spans than shocks to industrialized countries, or more simply, business cycles in developing countries are shorter but more volatile. “You can make of human beings what you want. The way he is governed commends Man to good, or to evil.” - J.F. von Pfeiffer (1715-1787) “Sure there are dishonest men in local government. But there are dishonest men in national government too.” - Richard M. Nixon (1913-1994)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.adelaide.edu.au/cies/papers/0307.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of Adelaide, Centre for International Economic Studies in its series Centre for International Economic Studies Working Papers with number 2003-07.

as in new window
Length: 54 pages
Date of creation: Mar 2003
Date of revision:
Handle: RePEc:adl:cieswp:2003-07

Contact details of provider:
Postal: Adelaide SA 5005
Phone: (+ 61 8) 8303 5672
Fax: (+ 61 8) 8223 1460
Email:
Web page: http://www.adelaide.edu.au/cies/
More information through EDIRC

Related research

Keywords: Decentralization; Infrastructure; Aggregate productivity; Growth;

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
  2. Garcia-Mila, T. & Mcguire, T.J., 1988. "The Contribution Of Publicity Provided Inputs To The State'S Economies," UFAE and IAE Working Papers 115-89, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  3. Futagami, Koichi & Morita, Yuichi & Shibata, Akihisa, 1993. " Dynamic Analysis of an Endogenous Growth Model with Public Capital," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 607-25, December.
  4. Barreto, Raul A., 2000. "Endogenous corruption in a neoclassical growth model," European Economic Review, Elsevier, vol. 44(1), pages 35-60, January.
  5. Dasgupta, Dipankar, 1999. "Growth versus welfare in a model of nonrival infrastructure," Journal of Development Economics, Elsevier, vol. 58(2), pages 359-385, April.
  6. 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.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Dzhumashev, Ratbek, 2008. "Corruption and regulatory burden," MPRA Paper 2081, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:adl:cieswp:2003-07. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dmitriy Kvasov).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.