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Private Costs and Public Infrastructure: The Mexican Case

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  • Mr. Russell D. Murphy
  • Mr. Andrew Feltenstein

Abstract

One objective of government investment is to develop public infrastructure which may reduce private sector costs. In a developing economy, the scope for payoffs to investments of this sort may be particularly large. A major concern related to the recent fiscal adjustment in Mexico is that it has been carried out, in part, by depleting public infrastructure stocks.We estimate the effects of public infrastructure on private sector costs in Mexico and calculate the implied optimal infrastructure stocks. Our estimates indicate that previous results suggesting a large productive role of public infrastructure capital are not robust. There is little evidence that public infrastructure plays a large role in reducing private sector costs.

Suggested Citation

  • Mr. Russell D. Murphy & Mr. Andrew Feltenstein, 2001. "Private Costs and Public Infrastructure: The Mexican Case," IMF Working Papers 2001/164, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2001/164
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    References listed on IDEAS

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    1. Charles R. Hulten, 1996. "Infrastructure Capital and Economic Growth: How Well You Use It May Be More Important Than How Much You Have," NBER Working Papers 5847, National Bureau of Economic Research, Inc.
    2. Berndt, Ernst & Hansson, Bengt, 1992. "Measuring the Contribution of Capital in Sweden," Working Paper Series 365, Research Institute of Industrial Economics.
    3. Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
    4. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    5. Berndt, Ernst R & Hansson, Bengt, 1992. " Measuring the Contribution of Public Infrastructure Capital in Sweden," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 151-168, Supplemen.
    6. Feltenstein, Andrew & Ha, Jiming, 1995. "The Role of Infrastructure in Mexican Economic Reform," The World Bank Economic Review, World Bank, vol. 9(2), pages 287-304, May.
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    Cited by:

    1. Vito Tanzi, 2005. "Building regional infrastructure in Latin America," INTAL Working Papers 2642, Inter-American Development Bank, INTAL.
    2. Torres Preciado, Víctor Hugo & Polanco Gaytán, Mayrén & Manzanares Rivera, José Luis, 2010. "Diferencias en el ingreso per cápita regional e infraestructura de transporte en México [Differences in per capita regional income and transport infrastructure in Mexico]," MPRA Paper 28081, University Library of Munich, Germany.

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