IDEAS home Printed from https://ideas.repec.org/a/aea/jecper/v6y1992i4p189-98.html
   My bibliography  Save this article

Policy Watch: Infrastructure Investment and Economic Growth

Author

Listed:
  • Alicia H. Munnell

Abstract

In the late 1980s, David Aschauer (1989) triggered a long overdue dialogue among economists and political leaders when he published a study arguing that much of the decline in U.S. productivity that occurred in the 1970s was precipitated by declining rates of public capital investment. My own work confirmed these results (Munnell, 1990a). Spending advocates seized on these findings as support for increased public investment. The enthusiasm among policymakers for the early Aschauer results was matched, if not surpassed, by skepticism on the part of many economists. Critics of these studies charged that the methodology was flawed, that the direction of causation between public investment and output growth is unclear and that, even if the historical empirical relationships were estimated correctly, they provide no clear indications for current policy. Who's right? What do we know and not know about the link between public infrastructure and productivity? And what are the implications of these results for policy?

Suggested Citation

  • 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.
  • Handle: RePEc:aea:jecper:v:6:y:1992:i:4:p:189-98
    Note: DOI: 10.1257/jep.6.4.189
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.6.4.189
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aschauer, David Alan, 1989. "Does public capital crowd out private capital?," Journal of Monetary Economics, Elsevier, vol. 24(2), pages 171-188, September.
    2. Edward M. Gramlich, 1990. "How should public infrastructure be financed?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 34, pages 223-245.
    3. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    4. John A. Tatom, 1991. "Public capital and private sector performance," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-15.
    5. Clifford Winston, 1991. "Efficient Transportation Infrastructure Policy," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 113-127, Winter.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Conrad, Klaus & Seitz, Helmut, 1997. "Infrastructure provision and international market share rivalry," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 715-734, November.
    2. Bennett, Daniel L., 2019. "Infrastructure investments and entrepreneurial dynamism in the U.S," Journal of Business Venturing, Elsevier, vol. 34(5), pages 1-1.
    3. Nigel Spence & Antonis Rovolis, 2002. "Duality theory and cost function analysis in a regional context: the impact of public infrastructure capital in the Greek regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 36(1), pages 55-78.
    4. Torstein Bye & Alexandra Katz, 1995. "Returns to Publicly Owned Transport Infrastructure Investment . A Cost Function/Cost Share Approach for Norway, 1971-1991," Discussion Papers 154, Statistics Norway, Research Department.
    5. Tessa Conroy & Steven Deller & Alexandra Tsvetkova, 2017. "Interstate Relocation Of Manufacturers And Business Climate," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 29(1), pages 18-45, March.
    6. Mathilde Le Moigne & Francesco Saraceno & Sébastien Villemot, 2016. "Probably Too Little, Certainly Too Late. An Assessment of the Juncker Investment Plan," Sciences Po publications 2016-10, Sciences Po.
    7. 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.
    8. Andreas Stephan, 2003. "Assessing the contribution of public capital to private production: Evidence from the German manufacturing sector," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(4), pages 399-417.
    9. Good, D. & Nadiri, M.I. & Sickles, R., 1996. "Index Number and Factor Demand Approaches to the Estimarion of Productivity," Working Papers 96-34, C.V. Starr Center for Applied Economics, New York University.
    10. Wang, Eric C., 2002. "Public infrastructure and economic growth: a new approach applied to East Asian economies," Journal of Policy Modeling, Elsevier, vol. 24(5), pages 411-435, August.
    11. Pina, Alvaro Manuel & St. Aubyn, Miguel, 2005. "Comparing macroeconomic returns on human and public capital: An empirical analysis of the Portuguese case (1960-2001)," Journal of Policy Modeling, Elsevier, vol. 27(5), pages 585-598, July.
    12. Musolesi, Antonio, 2011. "On public capital hypothesis with breaks," Economics Letters, Elsevier, vol. 110(1), pages 20-24, January.
    13. Pereira, Alfredo M. & de Frutos, Rafael Flores, 1999. "Public Capital Accumulation and Private Sector Performance," Journal of Urban Economics, Elsevier, vol. 46(2), pages 300-322, September.
    14. Achim Kemmerling & Andreas Stephan, 2000. "Political Economy of Infrastructure Investment Allocation: Evidence from a Panel of Large German Cities," CIG Working Papers FS IV 00-03, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    15. Conroy, Tessa & Deller, Steven & Tsvetkova, Alexandra, 2016. "Regional business climate and interstate manufacturing relocation decisions," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 155-168.
    16. 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 403-424, December.
    17. Wei Zou & Fen Zhang & Ziyin Zhuang & Hairong Song, 2008. "Transport Infrastructure, Growth, and Poverty Alleviation: Empirical Analysis of China," Annals of Economics and Finance, Society for AEF, vol. 9(2), pages 345-371, November.
    18. Erenburg, S. J. & Wohar, Mark E., 1995. "Public and private investment: Are there causal linkages?," Journal of Macroeconomics, Elsevier, vol. 17(1), pages 1-30.
    19. Ernst R. Berndt & Bengt Hansson, 1991. "Measuring the Contribution of Public Infrastructure Capital in Sweden," NBER Working Papers 3842, National Bureau of Economic Research, Inc.
    20. Alexander Eck & Joachim Ragnitz & Simone Scharfe & Christian Thater & Bernhard Wieland, 2015. "Öffentliche Infrastrukturinvestitionen: Entwicklung, Bestimmungsfaktoren und Wachstumswirkungen," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 72, October.

    More about this item

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:6:y:1992:i:4:p:189-98. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.