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Public Infrastructure and Economic Growth: Time-Series Properties and Evidence

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  • Lau, Sau-Him Paul
  • Sin, Chor-Yiu

Abstract

The authors examine whether economic growth is generated endogenously or exogenously, and estimate the externality effects due to private and public capital respectively. Applying a multivariate stochastic cointegration method to U.S. data, they find that the evidence is unfavorable to the endogenous growth model with public infrastructure. The estimated elasticity of output with respect to public capital is 0.11, smaller than typical values obtained in single-equation regression studies. On the other hand, if the share of capital income is taken to be one-third, then the spillover effect due to private capital is positive but may be as low as 0.10. Copyright 1997 by The Economic Society of Australia.

Suggested Citation

  • Lau, Sau-Him Paul & Sin, Chor-Yiu, 1997. "Public Infrastructure and Economic Growth: Time-Series Properties and Evidence," The Economic Record, The Economic Society of Australia, vol. 73(221), pages 125-135, June.
  • Handle: RePEc:bla:ecorec:v:73:y:1997:i:221:p:125-35
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