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Threshold Effects of the Public Capital Productivity : An International Panel Smooth Transition Approach

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  • Gilbert Colletaz

    () (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans)

  • Christophe Hurlin

    () (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans)

Abstract

Using a non linear panel data model we examine the threshold effects in the productivity of the public capital stocks for a panel of 21 OECD countries observed over 1965-2001. Using the so-called "augmented production function" approach, we estimate various specifications of a Panel Smooth Threshold Regression (PSTR) model recently developed by Gonzalez, Teräsvirta and Van Dijk (2004). One of our main results is the existence of strong threshold effects in the relationship between output and private and public inputs : whatever the transition mechanism specified, tests strongly reject the linearity assumption. Moreover this model allows cross-country heterogeneity and time instability of the productivity without specification of an ex-ante classification over individuals. Consequently it is posible to give estimates of productivity coefficients for both private and public capital stocks at any time and for each countries in the sample. Finally we proposed estimates of individual time varying elasticities that are much more reasonable than those previously published.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00008056.

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Date of creation: 20 Jan 2006
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Handle: RePEc:hal:wpaper:halshs-00008056

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Related research

Keywords: Public Capital ; Panel Smooth ; Threshold Regression Models;

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Cited by:
  1. Jerome Creel & Gwenaëlle Poilon, 2006. "Is public capital productive in Europe?," Documents de Travail de l'OFCE 2006-10, Observatoire Francais des Conjonctures Economiques (OFCE).
  2. Duarte, Rosa & Pinilla, Vicente & Serrano, Ana, 2013. "Is there an environmental Kuznets curve for water use? A panel smooth transition regression approach," Economic Modelling, Elsevier, vol. 31(C), pages 518-527.
  3. Bikai, Landry, 2010. "Les Effets Non Lineaires Des Deficits Budgetaires Sur L´Activite Economique En Cemac
    [Threshold Effects of Budgetary Policy on Economic Growth in Cemac]    ," MPRA Paper 24524, University Library of Munich, Germany.
  4. Danilo Trupkin & Raul Ibarra, 2011. "The Relationship between Inflation and Growth:A Panel Smooth Transition Regression Approach for Developed and Developing Countries," Documentos de Trabajo/Working Papers 1107, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
  5. Anne-Laure Delatte & Julien Fouquau, 2011. "The determinants of international reserves in the emerging countries: a nonlinear approach," Applied Economics, Taylor and Francis Journals, vol. 43(28), pages 4179-4192.
  6. Chakroun, Mohamed, 2009. "Health care expenditure and GDP: An international panel smooth transition approach," MPRA Paper 14322, University Library of Munich, Germany.
  7. Eggoh C. Jude, 2010. "Financial Development And Growth: A Panel Smooth Regression Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(1), pages 15-33, March.
  8. Fouquau, Julien & Hurlin, Christophe & Rabaud, Isabelle, 2008. "The Feldstein-Horioka puzzle: A panel smooth transition regression approach," Economic Modelling, Elsevier, vol. 25(2), pages 284-299, March.
  9. Fouquau, Julien & Bessec, Marie, 2008. "The Non-Linear Link between Electricity Consumption and Temperature in Europe : A Threshold Panel Approach," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/8180, Université Paris-Dauphine.
  10. Bayraktar, Nihal & Moreira, Emmanuel Pinto, 2007. "The composition of public expenditure and growth : a small-scale intertemporal model for low-income countries," Policy Research Working Paper Series 4430, The World Bank.
  11. Lena Dräger & Jan-Oliver Menz & Ulrich Fritsche, . "Perceived Inflation under Loss Aversion," Macroeconomics and Finance Series 201105, Hamburg University, Department Wirtschaft und Politik.
  12. López-Villavicencio, Antonia & Mignon, Valérie, 2011. "On the impact of inflation on output growth: Does the level of inflation matter?," Journal of Macroeconomics, Elsevier, vol. 33(3), pages 455-464, September.
  13. Lee, Chien-Chiang & Chiu, Yi-Bin, 2011. "Electricity demand elasticities and temperature: Evidence from panel smooth transition regression with instrumental variable approach," Energy Economics, Elsevier, vol. 33(5), pages 896-902, September.
  14. Sophie Béreau & Antonia Lopez Villavicencio & Valérie Mignon, 2008. "Nonlinear Adjustment of the Real Exchange Rate Towards its Equilibrium Value: a Panel Smooth Transition Error Correction Modelling," Working Papers 2008-23, CEPII research center.

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