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Does infrastructure have a transitory or longer-term impact? Evidence from China

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  • Zhang, Yin-Fang
  • Ji, Shengbao

Abstract

It is ambiguous in the literature whether infrastructure only has transitory effects by lifting the level of aggregate output, or a longer-term impact by boosting the growth rate of output. The paper attempts to shed empirical light on this issue by looking at the case of China. It employs an infrastructure-augmented production function framework and a growth regression model, and adopts panel threshold regressions to address non-linearity. The results show that infrastructure stocks (except railways) are more productive than other physical capital in raising output levels, but not so when it comes to the effect on long-term growth rates. The analysis also finds that infrastructure's productivity depends on whether it is oversupplied or in shortage relative to non-infrastructure capital.

Suggested Citation

  • Zhang, Yin-Fang & Ji, Shengbao, 2018. "Does infrastructure have a transitory or longer-term impact? Evidence from China," Economic Modelling, Elsevier, vol. 73(C), pages 195-207.
  • Handle: RePEc:eee:ecmode:v:73:y:2018:i:c:p:195-207
    DOI: 10.1016/j.econmod.2018.03.014
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    More about this item

    Keywords

    Infrastructure; Economic growth; Panel threshold-effect regression; China;
    All these keywords.

    JEL classification:

    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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