The Contribution of Local Public Infrastructure to Private Productivity and Its Political-Economy: Evidence from a Panel of Large German Cities
AbstractTThis paper proposes a simultaneous-equation approach to the estimation of the contribution of infrastructure accumulation to private production. A political economy model for the allocation of public infrastructure investment grants is formulated. Our empirical findings, using a panel of large German cities for the years 1980, 1986, and 1988, suggest that cities ruled by a council sharing the State ('Bundesland') government's current political affiliation were particularly successful in attracting infrastructure investment grants. With regard to the contribution of infrastructure accumulation to growth, we find that public capital is a significant factor in private production. Moreover, at least for the sample studied, we find that simultaneity between output and public capital is weak; thus, feedback effects from output to infrastructure are negligible. ZUSAMMENFASSUNG - (Der Beitrag lokaler öffentlicher Infrastruktur zur privaten Produktivität und seine politische Ökonomie: Empirische Evidenz von einem Paneldatensatz großer deutscher Städte) Dieses Papier verwendet ein simultanes Gleichungssystem zur Schätzung des Beitrags von Infrastrukturinvestitionen zu regionalem Wachstum. Ein polit-ökonomisches Modell der Allokation von Finanzzuweisungen für öffentliche Investitionen in Infrastruktur wird formuliert. Unsere empirischen Ergebnisse basierend auf einem Paneldatensatz für große deutsche Städte in den Jahren 1980, 1986 und 1988 deuten darauf hin, dass Städte, deren Mehrheit im Stadtrat die selbe politische "Couleur" wie die Landesregierung hatte, erfolgreicher bei der Zuteilung von Finanzzuweisungen waren. Im Hinblick auf den Beitrag der Infrastrukturakkumulation auf das Wachstum finden wir, dass öffentliches Kapital ein wichtiger Faktor für die private Produktion ist. Weiterhin, zumindest für den untersuchten Zeitraum, finden wir, dass die Simultanität zwischen Output und öffentlichem Kapital gering ist; daher sind Feedback-Effekte von Output zur Infrastruktur vernachlässigbar.
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 Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 01-14.
Length: 35 pages
Date of creation: Jul 2001
Date of revision:
Publication status: Published in Public Choice , Vol. 113(3-4), December 2002, pp. 403-424.
Contact details of provider:
Postal: Reichpietschufer 50, 10785 Berlin, Germany
Phone: (++49)(30) 25491-441
Fax: (++49)(30) 25491-442
Web page: http://www.wzb.eu/mp/wiw/default.en.htm
More information through EDIRC
Local Infrastructure; Intergovernmental Grants; Productivity;
Other versions of this item:
- Kemmerling, Achim & Stephan, Andreas, 2002. " The Contribution of Local Public Infrastructure to Private Productivity and Its Political Economy: Evidence from a Panel of Large German Cities," Public Choice, Springer, vol. 113(3-4), pages 403-24, December.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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.:
- Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
- Johansson, Eva, 1999.
"Intergovernmental Grants as a Tactical Instrument: Some Empirical Evidence from Swedish Municipalities,"
Working Paper Series
1999:10, Uppsala University, Department of Economics.
- Johansson, E., 1999. "Intergovernmental Grants As A Tactical Instrument: Some Empirical Evidence from Swedish Municipalities," Papers 1999:10, Uppsala - Working Paper Series.
- Hulten, Charles R. & Schwab, Robert M., 1997. "A fiscal federalism approach to infrastructure policy," Regional Science and Urban Economics, Elsevier, vol. 27(2), pages 139-159, April.
- David A. Aschauer, 1989. "Public investment and productivity growth in the Group of Seven," Economic Perspectives, Federal Reserve Bank of Chicago, issue Sep, pages 17-25.
- Seitz, Helmut, 1995. "The Productivity and Supply of Urban Infrastructures," The Annals of Regional Science, Springer, vol. 29(2), pages 121-41, May.
- Oulasvirta, Lasse, 1997. " Real and Perceived Effects of Changing the Grant System from Specific to General Grants," Public Choice, Springer, vol. 91(3-4), pages 397-416, June.
- Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
- Andrew Worthington & Brian Dollery, 1998.
"The political determination of intergovernmental grants in Australia,"
Springer, vol. 94(3), pages 299-315, March.
- Worthington, Andrew C & Dollery, Brian E, 1998. " The Political Determination of Intergovernmental Grants in Australia," Public Choice, Springer, vol. 94(3-4), pages 299-315, March.
- David Aschauer, 1988.
"Is public expenditure productive?,"
88-7, Federal Reserve Bank of Chicago.
- Avinash Dixit & John Londregan, 1998. "Ideology, Tactics, And Efficiency In Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 497-529, May.
- Alicia H. Munnell, 1992. "Policy Watch: Infrastructure Investment and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 189-198, Fall.
- David Alan Aschauer, 1990. "Why is infrastructure important?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 34, pages 21-68.
- Grossman, Philip J, 1994.
" A Political Theory of Intergovernmental Grants,"
Springer, vol. 78(3-4), pages 295-303, March.
- Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
- Olivier Cadot & Lars-Hendrik Röller & Andreas Stephan, 1999.
"A Political Economy Model of Infrastructure Allocation: An Empirical Assessment,"
CIG Working Papers
FS IV 99-15, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Cadot, Olivier & Röller, Lars-Hendrik & Stephan, Andreas, 1999. "A Political Economy Model of Infrastructure Allocation: An Empirical Assessment," CEPR Discussion Papers 2336, C.E.P.R. Discussion Papers.
- Seitz, Helmut, 1994. "Public capital and the demand for private inputs," Journal of Public Economics, Elsevier, vol. 54(2), pages 287-307, June.
- Crain, W Mark & Oakley, Lisa K, 1995. "The Politics of Infrastructure," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 1-17, April.
- John A. Tatom, 1991. "Public capital and private sector performance," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-15.
- Alicia H. Munnell & Leah M. Cook, 1990.
"How does public infrastructure affect regional economic performance?,"
New England Economic Review,
Federal Reserve Bank of Boston, issue Sep, pages 11-33.
- Alicia H. Munnell, 1990. "How does public infrastructure affect regional economic performance?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 34, pages 69-112.
- David Alan Aschauer, 1988. "Government spending and the "falling rate of profit."," Economic Perspectives, Federal Reserve Bank of Chicago, issue May, pages 11-17.
- Alicia H. Munnell, 1990. "Why has productivity growth declined? Productivity and public investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-22.
- Aschauer, David Alan, 1989.
"Does public capital crowd out private capital?,"
Journal of Monetary Economics,
Elsevier, vol. 24(2), pages 171-188, September.
- Crihfield, John B. & Panggabean, Martin P. H., 1995. "Is public infrastructure productive? A metropolitan perspective using new capital stock estimates," Regional Science and Urban Economics, Elsevier, vol. 25(5), pages 607-630, October.
- John A. Tatom, 1993. "Is an infrastructure crisis lowering the nation's productivity?," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 3-21.
- Garcia-Mila, Teresa & McGuire, Therese J., 1992. "The contribution of publicly provided inputs to states' economies," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 229-241, June.
- Randall W. Eberts, 1990. "Public infrastructure and regional economic development," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 15-27.
- Kovacs, Kent F., 2005. "Amount and Spatial Distribution of Public Open Space to Maximize the Net Benefits from Urban Recreation," 2005 Annual meeting, July 24-27, Providence, RI 19206, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Mitze, Timo & Stephan, Andreas, 2013. "Simultaneous-equations Analysis in Regional Science and Economic Geography," Working Paper Series in Economics and Institutions of Innovation 309, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
- Wolfgang Kitterer, 2007. "Nachhaltige Finanz- und Investitionspolitik der Bundesländer," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(s1), pages 53-83, 04.
- Valter Di Giacinto & Giacinto Micucci & Pasqualino Montanaro, 2012. "The Macroeconomic Impact of Infrastructures: A Literature Review and Empirical Analysis on the Case of Italy," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 1, March.
- Alfredo M. Pereira & Jorge M. Andraz, 2013.
"On The Economic Effects Of Public Infrastructure Investment: A Survey Of The International Evidence,"
Journal of Economic Development,
Chung-Ang Unviersity, Department of Economics, vol. 38(4), pages 1-37, December.
- Alfredo Marvão Pereira & Jorge M. Andraz, 2013. "On the economic effects of public infrastructure investment:A survey of the international evidence," Working Papers 108, Department of Economics, College of William and Mary.
- Alfredo Pereira & Jorge Andraz, 2012. "On the economic effects of public infrastructure investment: A survey of the international evidence," CEFAGE-UE Working Papers 2012_10, University of Evora, CEFAGE-UE (Portugal).
- Chiara Del Bo & Massimo Florio & Silvia Vignetti & Emanuela Sirtori, 2011. "Additionality and regional development: are EU Structural Funds complements or substitutes of national Public Finance?," Working Papers 201101, Centre for Industrial Studies (CSIL).
- Torrisi, Gianpiero, 2009.
"Infrastructures and economic performance: a critical comparison across four approaches,"
18688, University Library of Munich, Germany.
- Gianpiero Torrisi, 2010. "Infrastructures and Economic Performance: A Critical Comparison Across Four Approaches," Theoretical and Practical Research in Economic Fields, ASERS Publishing, vol. 0(1), pages 86-96, June.
- Bodenstein, Thilo and Achim Kemmerling, 2012. "Ripples in a rising tide: Why some EU regions receive more structural funds than others," European Integration online Papers (EIoP), European Community Studies Association Austria (ECSA-A), vol. 16, 01.
- Ozbay, Kaan & Ozmen-Ertekin, Dilruba & Berechman, Joseph, 2007. "Contribution of transportation investments to county output," Transport Policy, Elsevier, vol. 14(4), pages 317-329, July.
- Ward Romp & Jakob de Haan, 2007.
"Public Capital and Economic Growth: A Critical Survey,"
Perspektiven der Wirtschaftspolitik,
Verein für Socialpolitik, vol. 8(s1), pages 6-52, 04.
- Romp, Ward & de Haan, Jakob, 2005. "Public capital and economic growth: a critical survey," EIB Papers 2/2005, European Investment Bank, Economics Department.
- Fedderke, J.W. & Bogetic, Z., 2009.
"Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures,"
Elsevier, vol. 37(9), pages 1522-1539, September.
- Johannes Fedderke & Å½eljko Bogetic, 2005. "Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures," Working Papers 39, Economic Research Southern Africa.
- Fedderke, Johannes W. & Bogetic & Zeljko, 2006. "Infrastructure and growth in South Africa : direct and indirect productivity impacts of 19 infrastructure measures," Policy Research Working Paper Series 3989, The World Bank.
- Pedro R.D. Bom & Jenny E. Ligthart, 2009. "How Productive is Public Capital? A Meta-Regression Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0912, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Torrisi, Gianpiero, 2009. "Public infrastructure: definition, classification and measurement issues," MPRA Paper 12990, University Library of Munich, Germany.
- Bertarelli Silvia, 2006. "Capitale pubblico e crescita: una sintesi critica," Politica economica, Società editrice il Mulino, issue 3, pages 361-398.
- Daniel Albalate & Germà Bel & Xavier Fageda, 2010. "Is it Redistribution or Centralization? On the Determinants of Government Investment in Infrastructure," Working Papers XREAP2010-15, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2010.
- Andreas Stephan, 2007. "Zur Politischen Ökonomie öffentlicher Infrastrukturausgaben," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(s1), pages 116-132, 04.
- Zheng, Xinye & Li, Fanghua & Song, Shunfeng & Yu, Yihua, 2013.
"Central government's infrastructure investment across Chinese regions: A dynamic spatial panel data approach,"
China Economic Review,
Elsevier, vol. 27(C), pages 264-276.
- Zheng, Xinye & Li, Fanghua & Song, Shunfeng & Yu, Yihua, 2013. "Central Government's Infrastructure Investment across Chinese Regions: A Dynamic Spatial Panel Data Approach," MPRA Paper 50407, University Library of Munich, Germany.
- Torrisi, Gianpiero, 2009. "A multilevel analysis on the economic impact of public infrastructure and corruption on Italian regions," MPRA Paper 15487, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jennifer Rontganger).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.