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Efficiency of Infrastructure Provision: Australia, States and Territories

Author

Listed:
  • Amani Elnasri

    (School of Economics, Australian School of Business, the University of New South Wales)

Abstract

This paper examines the optimality of the provision of economic infrastructure in Australia using a system of Euler equations to represent intertemporal efficiency conditions. Employing Generalised Method of Moments, our estimation results suggest that dealing with individual types of infrastructure investments at State level is helpful for reaching realistic conclusions about infrastructure provision. In particular, the paper finds that while the efficiency conditions are satisfied at aggregate level, a disaggregate analysis which examines individual components of economic infrastructure reveals sub-optimality in the provision of some types of infrastructure across the States. In addition, contrary to other methods, our efficiency approach produces a quite sensible estimate of the infrastructure effect with an annual average rate of return of about 8 percent.

Suggested Citation

  • Amani Elnasri, 2014. "Efficiency of Infrastructure Provision: Australia, States and Territories," Discussion Papers 2014-25, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2014-25
    as

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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2014-25.pdf
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    References listed on IDEAS

    as
    1. Alicia H. Munnell, 1990. "How does public infrastructure affect regional economic performance?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 34, pages 69-112.
    2. John Quiggin, 1995. "Does Privatisation Pay?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(2), pages 23-42, April.
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    More about this item

    Keywords

    Economic infrastructure; Efficiency conditions; Disaggregate analysis;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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