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

Is infrastructure capital productive? A dynamic heterogeneous approach

Contents:

Author Info

  • César Calderón

    ()
    (The World Bank)

  • Enrique Moral-Benito

    ()
    (Banco de España)

  • Luis Servén

    ()
    (The World Bank)

Abstract

This paper offers an evaluation of the output contribution of infrastructure. Drawing from a large data set of infrastructure stocks covering 88 countries and spanning the years 1960-2000, and using a panel time-series approach, the paper estimates a long-run aggregate production function relating GDP to human capital, physical capital, and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport, power and telecommunications. Tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector, which we interpret as the long-run production function. Estimation of its parameters is performed using the pooled mean group (PMG) estimator, which allows for unrestricted short-run parameter heterogeneity across countries while imposing the (testable) restriction of long-run parameter homogeneity. The long-run elasticity of output with respect to the synthetic infrastructure index ranges between 0.07 and 0.10. The estimates are highly significant, both statistically and economically, and robust to alternative dynamic specifications and infrastructure measures. There is little evidence of long-run parameter heterogeneity across countries, whether heterogeneity is unconditional, or conditional on their level of development, population size, or infrastructure endowments.

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.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/11/Fich/dt1103e.pdf
File Function: First version, March 2011
Download Restriction: no

Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 1103.

as in new window
Length: 34 pages
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:bde:wpaper:1103

Contact details of provider:
Email:
Web page: http://www.bde.es/
More information through EDIRC

Related research

Keywords: Infrastructure; panel cointegration; parameter heterogeneity;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

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. Duffy-Deno, Kevin T. & Eberts, Randall W., 1991. "Public infrastructure and regional economic development: A simultaneous equations approach," Journal of Urban Economics, Elsevier, vol. 30(3), pages 329-343, November.
  2. Douglas Gollin, 2001. "Getting Income Shares Right," Department of Economics Working Papers, Department of Economics, Williams College 2001-11, Department of Economics, Williams College.
  3. Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Department of Economics Working Papers, Department of Economics, Williams College 2000-02, Department of Economics, Williams College.
  4. Egert, Balazs & Lommatzsch, Kirsten & Lahreche-Revil, Amina, 2006. "Real exchange rates in small open OECD and transition economies: Comparing apples with oranges?," Journal of Banking & Finance, Elsevier, Elsevier, vol. 30(12), pages 3393-3406, December.
  5. Jonathan R. W. Temple, 1998. "Robustness tests of the augmented Solow model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 13(4), pages 361-375.
  6. Futagami, Koichi & Morita, Yuichi & Shibata, Akihisa, 1993. " Dynamic Analysis of an Endogenous Growth Model with Public Capital," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 95(4), pages 607-25, December.
  7. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, Elsevier, vol. 32(1), pages 1-13, January.
  8. Alberto Alesina & Roberto Perotti, 1993. "Income Distribution, Political Instability, and Investment," NBER Working Papers 4486, National Bureau of Economic Research, Inc.
  9. Lars-Hendrik Röller & Leonard Waverman, 1996. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," CIG Working Papers, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) FS IV 96-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  10. Perotti, Roberto & Alesina, Alberto, 1996. "Income Distribution, Political Instability, and Investment," Scholarly Articles 4553018, Harvard University Department of Economics.
  11. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, Elsevier, vol. 90(1), pages 1-44, May.
  12. Suzanne McCoskey & Chihwa Kao, 1998. "A residual-based test of the null of cointegration in panel data," Econometric Reviews, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(1), pages 57-84.
  13. Johansen, Soren, 1992. "Cointegration in partial systems and the efficiency of single-equation analysis," Journal of Econometrics, Elsevier, Elsevier, vol. 52(3), pages 389-402, June.
  14. Matilde Mas & Joaquin Maudos & Francisco Perez & Ezequiel Uriel, 1996. "Infrastructures and Productivity in the Spanish Regions," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 30(7), pages 641-649.
  15. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 32(3), pages 1176-96, September.
  16. Gregoriou, Andros & Ghosh, Sugata, 2009. "On the heterogeneous impact of public capital and current spending on growth across nations," Economics Letters, Elsevier, Elsevier, vol. 105(1), pages 32-35, October.
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. Andrew Berg & Rafael Portillo & Edward F. Buffie & Catherine A. Pattillo & Luis-Felipe Zanna, 2012. "Public Investment, Growth, and Debt Sustainability," IMF Working Papers 12/144, International Monetary Fund.
  2. Santiago Acosta Ormaechea & Jiae Yoo, 2012. "Tax Composition and Growth," IMF Working Papers 12/257, International Monetary Fund.
  3. Grigoli, Francesco & Mills, Zachary, 2011. "Do high and volatile levels of public investment suggest misconduct ? the role of institutional quality," Policy Research Working Paper Series 5735, The World Bank.
  4. Vandycke, Nancy, 2013. "Natural resources, physical capital and institutions : evidence from Eurasia," Policy Research Working Paper Series 6586, The World Bank.
  5. Cristina Checherita-Westphal & Andrew Hughes Hallett & Philipp Rother, 2014. "Fiscal sustainability using growth-maximizing debt targets," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 46(6), pages 638-647, February.
  6. Justin Yifu Lin & Doerte Doemeland, 2012. "Beyond Keynesianism: Global Infrastructure Investments In Times Of Crisis," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1250015-1-1.
  7. Francesco Grigoli & Zachary Mills, 2014. "Institutions and public investment: an empirical analysis," Economics of Governance, Springer, Springer, vol. 15(2), pages 131-153, May.
  8. Bevan, David, 2012. "Aid, Fiscal Policy, Climate Change, and Growth," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  9. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2013. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," Sciences Po publications 13, Sciences Po.
  10. Warwick McKibbin & Timo Henckel, 2010. "The Economics of Infrastructure in a Globalized World: Issues, Lessons and Future Challenges," CAMA Working Papers 2010-39, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  11. Frédéric DOCQUIER & Tobias MÜLLER & Joaquín NAVAL, 2014. "Informality and long-run growth," Working Papers, FERDI P91, FERDI.
  12. Dethier, Jean-Jacques & Moore, Alexander, 2012. "Infrastructure in developing countries: An overview of some economic issues," Discussion Papers, University of Bonn, Center for Development Research (ZEF) 123305, University of Bonn, Center for Development Research (ZEF).
  13. Warwick McKibbin & Andrew B Stoeckel & YingYing Lu, 2012. "Global Fiscal Adjustment and Trade Rebalancing," CAMA Working Papers 2012-12, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  14. Eden, Maya & Kraay, Aart, 2014. ""Crowding in"and the returns to government investment in low-income countries," Policy Research Working Paper Series 6781, The World Bank.
  15. Bottasso, Anna & Castagnetti, Carolina & Conti, Maurizio, 2013. "And yet they Co-move! Public capital and productivity in OECD," Journal of Policy Modeling, Elsevier, Elsevier, vol. 35(5), pages 713-729.
  16. Anna Bottaso & Carolina Castagnetti & Maurizio Conti, 2011. "And Yet they Co-Move! Public Capital and Productivity in OECD: A Panel Cointegration Analysis with Cross-Section Dependence," Quaderni di Dipartimento, University of Pavia, Department of Economics and Quantitative Methods 154, University of Pavia, Department of Economics and Quantitative Methods.
  17. Limodio, Nicola, 2011. "The success of infrastructure projects in low-income countries and the role of selectivity," Policy Research Working Paper Series 5694, The World Bank.

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:bde:wpaper:1103. 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: (Mar�a Beiro. Electronic Dissemination of Information Unit. Research Department. Banco de Espa�a).

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.