IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Dynamic Output and Employment Effects of Public Capital

Listed author(s):
  • David Alan Aschauer

Some of my previous research investigates the static, or short run impacts of changes in the public capital stock on economic performance. For instance, in Aschauer (1997a) I use state level data for the period 1970 to 1990 and find that the public capital stock is an important determinant of the rate of growth of output per worker. Specifically, a one standard deviation increase in public capital (relative to private capital) induces an increase in the growth rate of output per worker of some 1.4 percent per year. Similarly, in Aschauer (1997b) I determine that the public capital stock is also a key factor lying behind the rates of growth of output and employment, with a one standard deviation rise in public capital generating an increase in the growth rate of output and employment, respectively, of about 1.6 and 0.5 percent per year. However, these findings leave open the question of the dynamic, or long run effects of public capital on the economy. To answer this question, it is just as important to understand the dynamic interrelationship between productivity, output, and employment as the economy evolves over time as it is to know the effect of public capital on the initial growth rates of these variables. For example, depending on the persistence of the increase in the productivity growth rate, any particular static increase in productivity growth can translate into a rather small of large increase in the long run level of output per worker. This paper explores these persistence concerns by stimulating the dynamic, long run effects of public capital on output and employment. Section II lays out a dynamic model relating output and employment growth to public capital, initial output, and initial employment--a minimalist model capable of capturing in a compact fashion the interrelationship between output and employment as the economy evolves over time. Section III presents empirical estimates of the model based on fixed effects regression analysis of U.S. state l

(This abstract was borrowed from another version of this item.)

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.

File URL:
Download Restriction: no

Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_191.

in new window

Date of creation: Apr 1997
Handle: RePEc:lev:wrkpap:wp_191
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:lev:wrkpap:wp_191. 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: (Elizabeth Dunn)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.