Is infrastructure capital productive ? a dynamic heterogeneous approach
AbstractThis paper offers an empirical evaluation of the output contribution of infrastructure. Drawing from a large data set on infrastructure stocks covering 88 countries and spanning the years 1960-2000, and using a panel time-series approach, the paper estimates a long-run aggregate production function relating GDP to human capital, physical capital, and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport, power, and telecommunications. Tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector, which is taken to represent the long-run production function. Estimation of its parameters is performed using the pooled mean group estimator, which allows for unrestricted short-run parameter heterogeneity across countries while imposing the (testable) restriction of long-run parameter homogeneity. The long-run elasticity of output with respect to the synthetic infrastructure index ranges between 0.07 and 0.10. The estimates are highly significant, both statistically and economically, and robust to alternative dynamic specifications and infrastructure measures. There is little evidence of long-run parameter heterogeneity across countries, whether heterogeneity is unconditional, or conditional on their level of development, population size, or infrastructure endowments.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 5682.
Date of creation: 01 Jun 2011
Date of revision:
Transport Economics Policy&Planning; Economic Theory&Research; Banks&Banking Reform; Public Sector Economics; Infrastructure Economics;
Other versions of this item:
- César Calderón & Enrique Moral-Benito & Luis Servén, 2011. "Is infrastructure capital productive? A dynamic heterogeneous approach," Banco de Espaï¿½a Working Papers 1103, Banco de Espa�a.
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-02 (All new papers)
- NEP-DEV-2011-07-02 (Development)
- NEP-EFF-2011-07-02 (Efficiency & Productivity)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jonathan R. W. Temple, 1998. "Robustness tests of the augmented Solow model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(4), pages 361-375.
- Alesina, Alberto & Perotti, Roberto, 1996.
"Income distribution, political instability, and investment,"
European Economic Review,
Elsevier, vol. 40(6), pages 1203-1228, June.
- Alberto Alesina & Roberto Perotti, 1993. "Income Distribution, Political Instability, and Investment," NBER Working Papers 4486, National Bureau of Economic Research, Inc.
- Röller, Lars-Hendrik & Waverman, Leonard, 2000.
"Telecommunications Infrastructure And Economic Development: A Simultaneous Approach,"
CEPR Discussion Papers
2399, C.E.P.R. Discussion Papers.
- Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
- Lars-Hendrik Röller & Leonard Waverman, 1996. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," CIG Working Papers FS IV 96-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Johansen, Soren, 1992. "Cointegration in partial systems and the efficiency of single-equation analysis," Journal of Econometrics, Elsevier, vol. 52(3), pages 389-402, June.
- Matilde Mas & Joaquin Maudos & Francisco Perez & Ezequiel Uriel, 1996.
"Infrastructures and Productivity in the Spanish Regions,"
Taylor & Francis Journals, vol. 30(7), pages 641-649.
- Ezequiel Uriel Jiménez & Francisco Pérez García & Matilde Mas Ivars & Joaquín Maudos Villarroya, 1995. "Infrastructures And Productivity In The Spanish Regions," Working Papers. Serie EC 1995-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Futagami, Koichi & Morita, Yuichi & Shibata, Akihisa, 1993. " Dynamic Analysis of an Endogenous Growth Model with Public Capital," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 607-25, December.
- Egert, Balazs & Lommatzsch, Kirsten & Lahreche-Revil, Amina, 2006.
"Real exchange rates in small open OECD and transition economies: Comparing apples with oranges?,"
Journal of Banking & Finance,
Elsevier, vol. 30(12), pages 3393-3406, December.
- Balazs Egert & Kirsten Lommatzsch & Amina Lahrèche-Révil, 2007. "Real Exchange Rates in Small Open OECD and Transition Economies: Comparing Apples with Oranges?," CESifo Working Paper Series 1928, CESifo Group Munich.
- Balázs Égert & Kirsten Lommatzsch & Amina Lahrèche-Révil, 2007. "Real Exchange Rates in Small Open OECD and Transition Economies: Comparing Apples with Oranges?," William Davidson Institute Working Papers Series wp859, William Davidson Institute at the University of Michigan.
- Duffy-Deno, Kevin T. & Eberts, Randall W., 1991.
"Public infrastructure and regional economic development: A simultaneous equations approach,"
Journal of Urban Economics,
Elsevier, vol. 30(3), pages 329-343, November.
- Kevin T. Duffy-Deno & Randall W. Eberts, 1989. "Public infrastructure and regional economic development: a simultaneous equations approach," Working Paper 8909, Federal Reserve Bank of Cleveland.
- Pedroni, Peter, 1999.
" Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 61(0), pages 653-70, Special I.
- Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Department of Economics Working Papers 2000-02, Department of Economics, Williams College.
- Perotti, Roberto & Alesina, Alberto, 1996. "Income Distribution, Political Instability, and Investment," Scholarly Articles 4553018, Harvard University Department of Economics.
- Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
- Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
- Gregoriou, Andros & Ghosh, Sugata, 2009. "On the heterogeneous impact of public capital and current spending on growth across nations," Economics Letters, Elsevier, vol. 105(1), pages 32-35, October.
- Chihwa Kao & Suzanne McCoskey, 1997.
"A Residual-Based Test Of The Null Of Cointegration In Panel Data,"
- Suzanne McCoskey & Chihwa Kao, 1998. "A residual-based test of the null of cointegration in panel data," Econometric Reviews, Taylor & Francis Journals, vol. 17(1), pages 57-84.
- Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
- Douglas Gollin, 2002.
"Getting Income Shares Right,"
Journal of Political Economy,
University of Chicago Press, vol. 110(2), pages 458-474, April.
- Grigoli, Francesco & Mills, Zachary, 2011. "Do high and volatile levels of public investment suggest misconduct ? the role of institutional quality," Policy Research Working Paper Series 5735, The World Bank.
- Lin, Justin Yifu & Doemeland, Doerte, 2012.
"Beyond Keynesianism : global infrastructure investments in times of crisis,"
Policy Research Working Paper Series
5940, The World Bank.
- Justin Yifu Lin & Doerte Doemeland, 2012. "Beyond Keynesianism: Global Infrastructure Investments In Times Of Crisis," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1250015-1-1.
- Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2013. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," Sciences Po publications 13, Sciences Po.
- Checherita-Westphal, Cristina & Hughes Hallett, Andrew & Rother, Philipp, 2012.
"Fiscal sustainability using growth-maximising debt targets,"
Working Paper Series
1472, European Central Bank.
- Cristina Checherita-Westphal & Andrew Hughes Hallett & Philipp Rother, 2014. "Fiscal sustainability using growth-maximizing debt targets," Applied Economics, Taylor & Francis Journals, vol. 46(6), pages 638-647, February.
- Vandycke, Nancy, 2013. "Natural resources, physical capital and institutions : evidence from Eurasia," Policy Research Working Paper Series 6586, The World Bank.
- Limodio, Nicola, 2011. "The success of infrastructure projects in low-income countries and the role of selectivity," Policy Research Working Paper Series 5694, The World Bank.
- Frédéric DOCQUIER & Tobias MÜLLER & Joaquín NAVAL, 2013.
"Informality and long-run growth,"
Discussion Papers (IRES - Institut de Recherches Economiques et Sociales)
2013034, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Warwick McKibbin & Timo Henckel, 2010. "The Economics of Infrastructure in a Globalized World: Issues, Lessons and Future Challenges," CAMA Working Papers 2010-39, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Anna Bottaso & Carolina Castagnetti & Maurizio Conti, 2011. "And Yet they Co-Move! Public Capital and Productivity in OECD: A Panel Cointegration Analysis with Cross-Section Dependence," Quaderni di Dipartimento 154, University of Pavia, Department of Economics and Quantitative Methods.
- McKibbin, Warwick J & Stoeckel, Andrew B & Lu, YingYing, 2012.
"Global fiscal adjustment and trade rebalancing,"
Policy Research Working Paper Series
6044, The World Bank.
- Dethier, Jean-Jacques & Moore, Alexander, 2012. "Infrastructure in developing countries: An overview of some economic issues," Discussion Papers 123305, University of Bonn, Center for Development Research (ZEF).
- Santiago Acosta Ormaechea & Jiae Yoo, 2012. "Tax Composition and Growth: A Broad Cross-Country Perspective," IMF Working Papers 12/257, International Monetary Fund.
- Andrew Berg & Rafael Portillo & Edward F. Buffie & Catherine A. Pattillo & Luis-Felipe Zanna, 2012. "Public Investment, Growth, and Debt Sustainability: Putting Together the Pieces," IMF Working Papers 12/144, International Monetary Fund.
- Bevan, David, 2012. "Aid, Fiscal Policy, Climate Change, and Growth," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.