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Examining the Effect of Macroeconomic, Institutional, and Capital Market Drivers on Infrastructure Investment

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  • Gonçalves dos Santos, João Pedro
  • Moutinho, Vítor Manuel Ferreira
  • Madaleno, Mara
  • Teixeira, Zélia Maria da Silva Serrasqueiro

Abstract

This work aims to identify the key drivers that have propelled infrastructure investment in the European Union. Using econometric analysis of panel data, we investigate the relative importance of macroeconomic, capital market, and institutional factors in determining infrastructure investment. All EU countries were selected (except Malta), and the data used centered on 1997 and 2020. Specifically, we use the Generalized Method of Moments (GMM) command to estimate the parameters in dynamic panel models. The use of the GMM econometric command in this research ensures more accurate and robust results, allowing for handling endogeneity and unobserved heterogeneity problems commonly encountered in panel data analysis. The results indicate that the macroeconomic variables overlap institutional issues and the local capital market's maturity level. Our findings shed light on the factors most relevant in driving infrastructure investment in the European Union and can inform the development of more effective public policies in this area.

Suggested Citation

  • Gonçalves dos Santos, João Pedro & Moutinho, Vítor Manuel Ferreira & Madaleno, Mara & Teixeira, Zélia Maria da Silva Serrasqueiro, 2025. "Examining the Effect of Macroeconomic, Institutional, and Capital Market Drivers on Infrastructure Investment," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 165-190.
    • Handle: RePEc:eee:ecanpo:v:86:y:2025:i:c:p:165-190
    DOI: 10.1016/j.eap.2025.02.038
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