Public Infrastructure and Economic Growth in Mexico
AbstractWe develop a model where investment in infrastructure complements private investment. We then provide time series evidence for Mexico on both the impact of public infrastructure on output, and on the optimality with which levels of infrastructure have been set. In particular, we look at the long-run effects of shocks to infrastructure on real output. We compute Long-Run Derivatives for kilowatts of electricity, roads and phone lines, and find that shocks to infrastructure have positive and significant effects on real output for all three measures of infrastructure. For electricity and roads, the effect becomes significant after 7 and 8 years, respectively, whereas for phones, the effect on growth is significant only after 13 years. These effects of infrastructure on output are in agreement with growth models where long-run growth is driven by endogenous factors of production. However, our results indicate that none of these variables seem to be set at growth maximizing levels.
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Bibliographic InfoPaper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c010_058.
Length: 13 pages
Date of creation: Jun 2005
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-01 (All new papers)
- NEP-DEV-2006-12-01 (Development)
- NEP-EFF-2006-12-01 (Efficiency & Productivity)
- NEP-HIS-2006-12-01 (Business, Economic & Financial History)
- NEP-PBE-2006-12-01 (Public Economics)
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