Public Capital, Congestion and Private Production in Australia
AbstractThis paper is an empirical investigation into the impact of public capital on the private sector’s economic activity in Australia. In particular, it is assumed that the contribution of public capital to private factor productivity is subject to congestion. New data sets of capital stocks and private output are constructed for the Australian economy. By estimating flexible functional forms of private sector production functions with congestion in public capital services, the paper shows that public capital is productive in private production but is subject to congestion. A one per cent decrease in the public capital output ratio would result in about 0.5 per cent decrease in private output. Empirical evidence also suggests that the restriction of constant returns to scale over private inputs, labour and private capital, and public inputs is valid.
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Bibliographic InfoPaper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2002n23.
Length: 26 pages
Date of creation: Nov 2002
Date of revision:
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Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
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Find related papers by JEL classification:
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- 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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