We present a theoretical framework for determining the short- and long-run effects of infrastructure. While the short-run effects have been the focus of most previous studies, here we derive long-run elasticities by taking into account the adjustment of quasi-fixed inputs to their optimum levels. By considering the impact of infrastructure on private investment decisions, we observe how, apart from the direct effect on costs in the short-run, infrastructure exerts an indirect source of influence in the long-run through their effect on private capital. The model is applied to manufacturing industries in the Spanish regions.
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Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number
69.
Length: 36 pages Date of creation: 2001 Date of revision: Handle: RePEc:bar:bedcje:200169
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Find related papers by JEL classification: H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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