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How can transportation policies affect growth? A theoretical analysis of the long-term effects of alternative mobility systems

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  • Bonatti, Luigi
  • Campiglio, Emanuele

Abstract

We present an example of how public policies affect the evolution of the economy by influencing consumption habits, life styles and work attitudes. In particular, we show that governments can boost long-run growth by moving public investment away from collective transportation systems and towards infrastructures necessary for using private vehicles. Indeed, by augmenting the relative convenience of using private mobility systems, which are those more costly for the households, the government induces them to increase their labour supply so as to afford larger expenditures in transportation. This has long-term welfare implications depending also on the negative externalities associated with transport.

Suggested Citation

  • Bonatti, Luigi & Campiglio, Emanuele, 2013. "How can transportation policies affect growth? A theoretical analysis of the long-term effects of alternative mobility systems," Economic Modelling, Elsevier, vol. 31(C), pages 528-540.
  • Handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:528-540
    DOI: 10.1016/j.econmod.2012.12.014
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    References listed on IDEAS

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    1. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    2. Alberto F. Alesina & Edward L. Glaeser & Bruce Sacerdote, 2006. "Work and Leisure in the U.S. and Europe: Why So Different?," NBER Chapters,in: NBER Macroeconomics Annual 2005, Volume 20, pages 1-100 National Bureau of Economic Research, Inc.
    3. 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, April.
    4. Olivier Blanchard, 2004. "The Economic Future of Europe," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 3-26, Fall.
    5. repec:aph:ajpbhl:2003:93:9:1546-1551_1 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Campiglio, Emanuele, 2014. "The structural shift to green services: A two-sector growth model with public capital and open-access resources," Structural Change and Economic Dynamics, Elsevier, vol. 30(C), pages 148-161.
    2. Castillo-Manzano, José I. & Pedregal, Diego J. & Pozo-Barajas, Rafael, 2016. "An econometric evaluation of the management of large-scale transport infrastructure in Spain during the great recession: Lessons for infrastructure bubbles," Economic Modelling, Elsevier, vol. 53(C), pages 302-313.

    More about this item

    Keywords

    Endogenous growth; Public investment; Consumption habits; Labour supply; Negative externalities;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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