Sustainable infrastructure investment with labor-only production
The purpose of this paper is to consider a partial equilibrium model for a sustainable infrastructure investment in a labor-production economy. We consider an inter-temporal Stackelberg game in a "capital primitive" economy where all capital investments are made by a Central Agency (a government). The government is assumed to have a number of objectives including sustainability of the infrastructure investments, while firms are assumed to be myopic, maximizing only current profits and paying taxes as a function of their returns. Both open-loop and closed-loop (feedback) Stackelberg strategies are considered. Based on the analysis of the investment game, some conclusions are drawn regarding the propensity to invest as a function of sustainability constraints, the taxation rates and employment levels. We then show that investments can tend to a constant level and thus strategic government goals of sustainability and employment growth can be planned only if labor costs and the general price index are steady or characterized by a set of conditions ensuring the attainability of the steady-state investment.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bradford, David F, 1975. "Constraints on Government Investment Opportunities and the Choice of Discount Rate," American Economic Review, American Economic Association, vol. 65(5), pages 887-99, December.
- Aschauer, David Alan, 1989.
"Does public capital crowd out private capital?,"
Journal of Monetary Economics,
Elsevier, vol. 24(2), pages 171-188, September.
- Cain, Louis P., 1997. "Historical perspective on infrastructure and US economic development," Regional Science and Urban Economics, Elsevier, vol. 27(2), pages 117-138, April.
- Shah, Anwar, 1992. "Dynamics of Public Infrastructure, Industrial Productivity and Profitability," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 28-36, February.
- Morrison, Catherine J & Schwartz, Amy Ellen, 1996.
"State Infrastructure and Productive Performance,"
American Economic Review,
American Economic Association, vol. 86(5), pages 1095-1111, December.
- Holtz-Eakin, Douglas & Schwartz, Amy Ellen, 1995.
"Infrastructure in a structural model of economic growth,"
Regional Science and Urban Economics,
Elsevier, vol. 25(2), pages 131-151, April.
- Douglas Holtz-Eakin & Amy Ellen Schwartz, 1994. "Infrastructure in a Structural Model of Economic Growth," NBER Working Papers 4824, National Bureau of Economic Research, Inc.
- Morrison, Catherine J & Schwartz, Amy Ellen, 1996. "Public Infrastructure, Private Input Demand, and Economic Performance in New England Manufacturing," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(1), pages 91-101, January.
- Manecke, Nicola & Schoensleben, Paul, 2004. "Cost and benefit of Internet-based support of business processes," International Journal of Production Economics, Elsevier, vol. 87(3), pages 213-229, February.
- Corbey, Michael, 1991. "Measurable economic consequences of investments in flexible capacity," International Journal of Production Economics, Elsevier, vol. 23(1-3), pages 47-57, October.
- Kwan, Andy C C & Wu, Yangru & Zhang, Junxi, 1999. "Fixed Investment and Economic Growth in China," Economic Change and Restructuring, Springer, vol. 32(1), pages 67-79.
- Rioja, Felix K., 1999. "Productiveness and welfare implications of public infrastructure: a dynamic two-sector general equilibrium analysis," Journal of Development Economics, Elsevier, vol. 58(2), pages 387-404, April.
- Akkermans, H. A. & van der Horst, H., 2002. "Managing IT infrastructure standardisation in the networked manufacturing firm," International Journal of Production Economics, Elsevier, vol. 75(1-2), pages 213-228, January.
- Lu, Chin-Shan & Yang, Ching-Chiao, 2007. "An evaluation of the investment environment in international logistics zones: A Taiwanese manufacturer's perspective," International Journal of Production Economics, Elsevier, vol. 107(1), pages 279-300, May.
- Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
- Aschauer, David Alan, 1989.
"Is public expenditure productive?,"
Journal of Monetary Economics,
Elsevier, vol. 23(2), pages 177-200, March.
- Robert Ford & Pierre Poret, 1991. "Infrastructure and Private-Sector Productivity," OECD Economics Department Working Papers 91, OECD Publishing.
- Blanca Sanchez-Robles, 1998. "Infrastructure Investment And Growth: Some Empirical Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 16(1), pages 98-108, 01.
- Manning, Richard & Markusen, James R & McMillan, John, 1985. "Paying for Public Inputs," American Economic Review, American Economic Association, vol. 75(1), pages 235-38, March.
- Alicia H. Munnell, 1992. "Policy Watch: Infrastructure Investment and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 189-198, Fall.
- Anwar, Sajid, 2001. "Government spending on public infrastructure, prices, production and international trade," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(1), pages 19-31.
- Evans, Paul & Karras, Georgios, 1994. "Are Government Activities Productive? Evidence from a Panel of U.S. States," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 1-11, February.
- Ernst R. Berndt & Bengt Hansson, 1991. "Measuring the Contribution of Public Infrastructure Capital in Sweden," NBER Working Papers 3842, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:113:y:2008:i:2:p:876-886. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.