Researchers, commentators, and politicians have devoted steadily more attention to infrastructure in response to claims that inadequate accumulation of public capital has contributed to substandard U.S. economic growth. Despite this, the link between infrastructure and productivity growth remains controversial. In this regard, it is somewhat surprising that infrastructure research has developed in isolation from the large literature on economic growth. We develop a neoclassical growth model that explicitly incorporates infrastructure and is designed to provide a tractable framework within which to analyze the empirical importance of public capital accumulation to productivity growth. We find little support for claims of a dramatic productivity boost from increased infrastructure outlays. In a specification designed to provide an upper bound for the influence of infrastructure, we estimate that raising the rate of infrastructure investment would have had a negligible impact on annual productivity growth between 1971 and 1986.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
4824.
Length: Date of creation: Aug 1994 Date of revision: Handle: RePEc:nbr:nberwo:4824
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Find related papers by JEL classification: E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
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Haaparanta, Pertti & Juurikkala, Tuuli & Lazareva, Olga & Pirttilä, Jukka & Solanko, Laura & Zhuravskaya, Ekaterina, 2003.
"Firms and public service provision in Russia,"
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16/2003, Bank of Finland, Institute for Economies in Transition.
[Downloadable!]
Pertti Haaparanta & Tuuli Juurikkala & Olga Lazareva & Jukka Pirttila & Laura Solanko & Ekaterina Zhuravskaya, 2003.
"Firms And Public Service Provision In Russia,"
Working Papers
w0041, Center for Economic and Financial Research (CEFIR).
[Downloadable!]