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Comparison of the productivity of public capital by project type: Central-government, subsidized-local, and unsubsidized-local projects in Japan

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  • Kameda, Keigo
  • Lu, Zhenkun
  • Fukui, Masaki

Abstract

Using a panel of Japanese regional data from 1960 to 2003, we estimated the production effect of public capital formed through three types of government projects: (1) projects directly implemented by the central government (central-government projects), (2) projects that are implemented by local governments but induced through subsidies by the central government (subsidized-local projects), and (3) projects that are implemented by local governments without central subsidies (unsubsidized-local projects). The results showed that the unsubsidized-local projects were the most productive among the three types. In addition, the subsidized-local projects were found to be the least productive, being less effective than the central projects. This may suggest the existence of inefficiency factors that central subsidization for local projects entails under the Japanese system of intergovernmental transfers.

Suggested Citation

  • Kameda, Keigo & Lu, Zhenkun & Fukui, Masaki, 2022. "Comparison of the productivity of public capital by project type: Central-government, subsidized-local, and unsubsidized-local projects in Japan," Japan and the World Economy, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:japwor:v:61:y:2022:i:c:s0922142522000056
    DOI: 10.1016/j.japwor.2022.101119
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    Cited by:

    1. Lu, Zhenkun & Kameda, Keigo, 2024. "Impact of fiscal policies on the labor market with search friction: An estimated DSGE model for Japan," Journal of the Japanese and International Economies, Elsevier, vol. 72(C).

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    More about this item

    Keywords

    Public capital; Productivity; Project category; Non-stationarity; Decentralization;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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