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Output responses to infrastructure investment in the Netherlands, 1850-1913

Author

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  • Groote, Peter
  • Jacobs, Jan
  • Sturm, Jan-Egbert

    (Groningen University)

Abstract

This paper combines a new historical data set regarding capital formation in infrastructure in the Netherlands in the nineteenth century with data-oriented econometric techniques aimed at testing the causal relationship between these infrastructural investments and economic growth. The resulting vector autoregression (VAR) model is analysed further with impulse response analysis. The results show that the time series characteristics of both capital formation and GDP are trend stationary, which is a fundamental difference with their twentieth century counterparts. The paper finds strong evidence of both a long term and medium term or short term impact. In the short run positive expenditure effects are partly offset bu negative transitional dynamics. To fine tune the analysis we have exploited the possibility to disaggregate the data set in basic and complementary infrastructure investment. Whereas the effect on output is significantly positive for basic infrastructure investment, it is absent for complementary infrastructure investment.

Suggested Citation

  • Groote, Peter & Jacobs, Jan & Sturm, Jan-Egbert, 1995. "Output responses to infrastructure investment in the Netherlands, 1850-1913," GGDC Research Memorandum 199524, Groningen Growth and Development Centre, University of Groningen.
    • Handle: RePEc:gro:rugggd:199524
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    File URL: http://irs.ub.rug.nl/ppn/265438772
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    Cited by:

    1. repec:dgr:rugggd:200362 is not listed on IDEAS
    2. Castaldi, Carolina & Sapio, Sandro, 2006. "The Properties of Sectoral Growth: Evidence from Four Large European Economies," GGDC Research Memorandum GD-88, Groningen Growth and Development Centre, University of Groningen.
    3. repec:dgr:rugggd:gd-88 is not listed on IDEAS
    4. repec:dgr:rugsom:03c20 is not listed on IDEAS
    5. Robert J. Hill, 2004. "Constructing Price Indexes across Space and Time: The Case of the European Union," American Economic Review, American Economic Association, vol. 94(5), pages 1379-1410, December.

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