Regional Infrastructure and Firm Investment. Theory and Empirical Evidence for Italy
We model the channels through which public expenditure on infrastructure influences firm value and shapes its investment decisions via both adjustment costs and marginal profitability of capital. We test these hypotheses by using a large panel of Italian firms. Empirical results show that infrastructure interacts with revenues and costs in shaping firm's profitability of capital and influences its adjustment costs. Finally we find that infrastructure expenditure contributes to reduce the economic gap between the North and the South of Italy. These effects vary across regions and sectors.
|Date of creation:||Mar 2009|
|Contact details of provider:|| Postal: London E1 4NS|
Phone: +44 (0) 20 7882 5096
Fax: +44 (0) 20 8983 3580
Web page: http://www.econ.qmul.ac.uk
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Caballero, Ricardo J., 1999.
Handbook of Macroeconomics,
in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 12, pages 813-862
- Christopher F. Baum & Mustafa Caglayan & Oleksandr Talavera, 2006.
"Uncertainty Determinants of Firm Investment,"
Boston College Working Papers in Economics
646, Boston College Department of Economics, revised 24 Feb 2007.
- Manuel Arellano & Stephen Bond, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 277-297.
- Tom Doan, "undated". "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Evans, Paul & Karras, Georgios, 1994. "Is government capital productive? Evidence from a panel of seven countries," Journal of Macroeconomics, Elsevier, vol. 16(2), pages 271-279.
- Alfredo M. Pereira, 2000. "Is All Public Capital Created Equal?," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 513-518, August.
- Sean Cleary, 1999. "The Relationship between Firm Investment and Financial Status," Journal of Finance, American Finance Association, vol. 54(2), pages 673-692, 04.
- David Aschauer, 1988.
"Does public capital crowd out private capital?,"
88-10, Federal Reserve Bank of Chicago.
- Federico Bonaglia & Eliana La Ferrara & Massimiliano Marcellino, "undated".
"Public Capital and Economic Performance: Evidence from Italy,"
163, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- 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.
- R. Glenn Hubbard, 1998.
"Capital-Market Imperfections and Investment,"
Journal of Economic Literature,
American Economic Association, vol. 36(1), pages 193-225, March.
- Ingrid Ott & Susanne Soretz, 2006. "Government expenditure, capital adjustment, and economic growth," Computing in Economics and Finance 2006 362, Society for Computational Economics.
- Sergio Destefanis & Vania Sena, 2005. "Public capital and total factor productivity: New evidence from the Italian regions, 1970-98," Regional Studies, Taylor & Francis Journals, vol. 39(5), pages 603-617.
- Alfredo M. Pereira & Jorge M. Andraz, 2007.
"Public Investment In Transportation Infrastructures And Industry Performance In Portugal,"
Journal of Economic Development,
Chung-Ang Unviersity, Department of Economics, vol. 32(1), pages 1-20, June.
- Alfredo M. Pereira & Jorge M. Andraz, 2006. "Public Investment in Transportation Infrastructures and Industry Performance in Portugal," Working Papers 45, Department of Economics, College of William and Mary, revised 30 Apr 2007.
- Demetriades, Panicos O & Mamuneas, Theofanis P, 2000. "Intertemporal Output and Employment Effects of Public Infrastructure Capital: Evidence from 12 OECD Economics," Economic Journal, Royal Economic Society, vol. 110(465), pages 687-712, July.
- Habib Ahmed & Stephen M. Miller, 1999.
"Crowding-Out and Crowding-In Effects of the Components of Government Expenditure,"
1999-02, University of Connecticut, Department of Economics.
- H. Ahmed & SM. Miller, 2000. "Crowding-out and crowding-in effects of the components of government expenditure," Contemporary Economic Policy, Western Economic Association International, vol. 18(1), pages 124-133, 01.
- 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.
- Martin, Philippe & Rogers, Carol Ann, 1995.
"Industrial location and public infrastructure,"
Journal of International Economics,
Elsevier, vol. 39(3-4), pages 335-351, November.
- Baltagi, Badi H & Pinnoi, Nat, 1995. "Public Capital Stock and State Productivity Growth: Further Evidence from an Error Components Model," Empirical Economics, Springer, vol. 20(2), pages 351-359.
- John A. Tatom, 1991. "Should government spending on capital goods be raised?," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 3-15.
When requesting a correction, please mention this item's handle: RePEc:qmw:qmwecw:wp639. 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: (Nick Vriend)
If references are entirely missing, you can add them using this form.