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How Productive is Public Capital? A Meta-Regression Analysis

The last two decades have witnessed a great deal of effort devoted to measuring the private output elasticity of public capital, but remarkably little consensus has emerged. This paper estimates the meta-output elasticity of public capital and explains the heterogeneity of primary estimates around this value. We develop a simple approach to measure and correct meta-estimates for bidirectional publication bias. Using meta-regression analysis applied to a sample of 67 studies for the 1983{2008 period, we derive an unconditional meta-output estimate of 0.146 and show that the `true' effect is rather heterogeneous. The intraregional short-run output elasticity amounts to 0.085. In the long run, and after accounting for interregional spillover effects, the contribution of public capital to output increases by a factor of three. The results suggest that the high output elasticities found in the early time-series literature are compatible with long-run (cointegrating) estimates found more recently. We also show that the observed estimates are significantly inflated by bidirectional publication bias.

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Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper0912.

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Length: 42 pages
Date of creation: 01 Aug 2009
Date of revision:
Handle: RePEc:ays:ispwps:paper0912
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