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Is public expenditure really productive?: New evidence for the USA and The Netherlands

  • Sturm, Jan Egbert
  • de Haan, Jakob

This paper reviews empirical evidence for the United States on the impact of the public capital stock on productivity. On econometric grounds it is argued that most previous research is flawed. If the well-known model of Aschauer is estimated in first differences - which is necessary as the variables used are neither stationary nor cointegrated - the model breaks down entirely. Similar results are found for the Netherlands.

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File URL: http://www.sciencedirect.com/science/article/B6VB1-3XWS047-10/2/5720e9f9835459c227eabb2fb13589d5
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 12 (1995)
Issue (Month): 1 (January)
Pages: 60-72

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Handle: RePEc:eee:ecmode:v:12:y:1995:i:1:p:60-72
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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  12. Maddison, Angus, 1994. "Standardised Estimates of Fixed Capital Stock: A Six Country Comparison," GGDC Research Memorandum 199409, Groningen Growth and Development Centre, University of Groningen.
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  19. Evans, Paul & Karras, Georgios, 1994. "Is government capital productive? Evidence from a panel of seven countries," Journal of Macroeconomics, Elsevier, vol. 16(2), pages 271-279.
  20. 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.
  21. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
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  26. 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.
  27. McMillin, W Douglas & Smyth, David J, 1994. "A Multivariate Time Series Analysis of the United States Aggregate Production Function," Empirical Economics, Springer, vol. 19(4), pages 659-73.
  28. Douglas Holtz-Eakin, 1992. "Public-Sector Capital and the Productivity Puzzle," NBER Working Papers 4122, National Bureau of Economic Research, Inc.
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  30. Ratner, Jonathan B., 1983. "Government capital and the production function for U.S. private output," Economics Letters, Elsevier, vol. 13(2-3), pages 213-217.
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