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TFP, Costs, and Public Infrastructure: An Equivocal Relationship

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  • Eliana La Ferrara
  • Massimiliano Marcellino

Abstract

This paper studies the impact of public infrastructure on economic perfor-mance. We employ three different methodologies to estimate the returns to public investment. First, we relate growth in total factor productivity to accumulation of public capital. Second, we assess the role of public capital as an input to production. Third, we evaluate the reduction in costs that can be attributed to the presence of public infrastructure. Using regional data for Italy, we find that the aggregate impact of public capital is positive and significant under the first approach, slightly negative under the second, and virtually zero under the third. More coherent results obtain when disaggregating by geographical area and time period: under all three approaches, the effectiveness of public investment seems to be increasing over time and to be higher in Central and Southern regions than in Northern ones.

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  • Eliana La Ferrara & Massimiliano Marcellino, "undated". "TFP, Costs, and Public Infrastructure: An Equivocal Relationship," Working Papers 176, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  • Handle: RePEc:igi:igierp:176
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    Cited by:

    1. Guido Ascari & Valeria di Cosmo, 2005. "Determinants of total factor productivity in the italian Regions," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2005(2).
    2. Pedro R. D. Bom & Jenny Ligthart, 2008. "How Productive is Public Capital? A Meta-Analysis," CESifo Working Paper Series 2206, CESifo.
    3. Balazs Egert & Tomasz Kozluk & Douglas Sutherland, 2009. "Infrastructure and Growth: Empirical Evidence," CESifo Working Paper Series 2700, CESifo.
    4. Emanuela Marrocu & Raffaele Paci, 2010. "The effects of public capital on the productivity of the Italian regions," Applied Economics, Taylor & Francis Journals, vol. 42(8), pages 989-1002.
    5. Federico Bonaglia & Eliana La Ferrara & Massimiliano Marcellino, 2000. "Public Capital and Economic Performance: Evidence from Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 59(2), pages 221-244, September.
    6. Valter Di Giacinto & Giacinto Micucci & Pasqualino Montanaro, 2010. "Dynamic Macroeconomic Effects of Public Capital: Evidence from Regional Italian Data," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 69(1), pages 29-66, April.
    7. Pedro R.D. Bom & Jenny E. Ligthart, 2009. "How Productive is Public Capital? A Meta-Regression Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0912, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    8. Francesco Aiello & Camilla Mastromarco & Angelo Zago, 2011. "Be productive or face decline. On the sources and determinants of output growth in Italian manufacturing firms," Empirical Economics, Springer, vol. 41(3), pages 787-815, December.
    9. Salvatore Amico Roxas & Antonio Cristofaro & Giuseppe Piroli, 2012. "Public Capital in the Private Sector of Italian Economy," EERI Research Paper Series EERI_RP_2012_19, Economics and Econometrics Research Institute (EERI), Brussels.
    10. Ward Romp & Jakob De Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(S1), pages 6-52, April.
    11. Farhadi, Minoo, 2015. "Transport infrastructure and long-run economic growth in OECD countries," Transportation Research Part A: Policy and Practice, Elsevier, vol. 74(C), pages 73-90.
    12. Leonzio Rizzo & Riccardo Secomandi, 2018. "Lo stock di capitale comunale: indicazioni per le politiche di intervento infrastrutturale di Regione Lombardia," Working Papers 2018117, University of Ferrara, Department of Economics.
    13. Trofimov, Ivan D., 2020. "Public capital and productive economy profits: evidence from OECD economies," MPRA Paper 106848, University Library of Munich, Germany.
    14. Torrisi, Gianpiero, 2009. "Infrastructures and economic performance: a critical comparison across four approaches," MPRA Paper 18688, University Library of Munich, Germany.
    15. Davide Piacentino, 2008. "Productivity, Infrastructures and Convergence: Panel Data Evidence on Italian Regions," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2008(2), pages 5-26.
    16. Torrisi, Gianpiero, 2009. "A multilevel analysis on the economic impact of public infrastructure and corruption on Italian regions," MPRA Paper 15487, University Library of Munich, Germany.
    17. Víctor Adame & Javier Alonso & Luisa Pérez & David Tuesta, 2017. "Infrastructure & economic growth from a meta-analysis approach: do all roads lead to Rome?," Working Papers 17/07, BBVA Bank, Economic Research Department.
    18. R. Pala & E. Marrocu & R. Paci, 2000. "Estimation of total factor productivity for regions and sectors in Italy. A panel cointegration approach," Working Paper CRENoS 200016, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    19. Federici, Andrea, 2018. "Il rapporto tra capitale pubblico e altre variabili macroeconomiche: analisi della letteratura [The relationship between public capital and other macroeconomic variable: a literature review]," MPRA Paper 88515, University Library of Munich, Germany.
    20. Torrisi, Gianpiero, 2009. "Public infrastructure: definition, classification and measurement issues," MPRA Paper 12990, University Library of Munich, Germany.
    21. Andrei S. Akhremenko & Alexander Petrov, 2014. "Efficiency, Policy Selection, And Growth In Democracy And Autocracy: A Formal Dynamical Model," HSE Working papers WP BRP 16/PS/2014, National Research University Higher School of Economics.
    22. Daniel Montolio & Albert Solé‐Ollé, 2009. "Road investment and regional productivity growth: the effects of vehicle intensity and congestion," Papers in Regional Science, Wiley Blackwell, vol. 88(1), pages 99-118, March.
    23. Juan A. Núñez-Serrano & Francisco J. Velázquez, 2017. "Is Public Capital Productive? Evidence from a Meta-analysis," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 39(2), pages 313-345.

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