Public Capital Maintenance, Decentralization, and US Productivity Growth
Data published by the US Congressional Budget Office show that over the last fifty years expenditures for infrastructureâ€™s operations and maintenance (O&M) have roughly equalled those for new capital. We use this data set to investigate the productive impact of public infrastructure spending, taking into account its composition for each government level. We find that a rise (fall) in infrastructure expenditures by states and localities (the federal government) would enhance future productivity growth and that the rise in state and local spending should mainly come from additional O&M outlays in the transport sector.
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