And yet they Co-move! Public capital and productivity in OECD (original) (raw)
Related papers
2011
In this paper we add to the debate on the public capital-productivity link by exploiting very recent developments in the panel time series literature that take into account cross sectional correlation in non-stationary panels. In particular we evaluate the productive effect of public capital by estimating various production functions for a panel of 21 OECD countries over the period 1975-2002. We find strong evidence of common factors that drive the cointegration relationship among variables; moreover, our results suggest a public capital elasticity of GDP in the range 0.05-0.15, depending on model specification. Results are robust to the evidence of spillovers from public capital investments in other countries and to controlling for other productivity determinants like human capital, the stock of patents and R&D capital.
Public capital and productive economy profits - evidence from OECD economies
2019
This paper examines the effects of public capital and government final consumption expenditure on the rate of profit in the productive sectors of the OECD economies over the period of 1977-2006. Public capital (expressed as a proportion of private capital) is considered in a multivariate setting, alongside other determinants of profit. The panel cointegration and panel vector autoregressive (PVAR) models are used to remedy the shortcomings of the time series analyses in the short samples and the stationary data panel models. The study demonstrates the absence of cointegration between the variables, but the positive and significant effects of public capital that are particularly manifest in the short-run, as well as the negative and insignificant impact of overall government consumption expenditure. The paper highlights the importance of public capital for macroeconomic outcomes, the relevance of the real channels of fiscal policy, and the non-neutrality of the type of government expenditure for economic outcomes.
Public capital and productivity growth: evidence for Belgium, 1953–1996
Economic Modelling, 2001
This paper analyses the impact of public capital on multifactor productivity in Belgium making use of single-equation cointegration analysis on annual data for the period 1953᎐1996. Instead of fitting a deterministic trend to capture the underlying technological progress, patent statistics are used as a proxy. From the estimated long-run equilibrium between public capital and productivity, we estimate an error᎐correction model to check for the direction of causality. The results support a strong positive relationship with causality running from public capital to productivity. ᮊ
Total factor productivity growth and public capital: the case of Italy
Studi Economici, 2002
This paper is aimed at contributing to the debate on the relationship between productive public spending and productivity growth in the Italian regions over the period 1970-1995, the main novelty being the decomposition of productivity growth into technical efficiency change and technological progress by means of Data Envelopment Analysis. The Banker test is used in order to test empirically the significance of public capital in the DEA model, concluding that it would not be correct to consider it as a direct productive input. However, public capital turns out to be positively correlated with productivity growth and both of its mutually exclusive and exhaustive components. These results lead us to conclude that public capital has contributed to productivity gains not directly by entering the production function but as a positive externality to regional economies.
Public Capital and Total Factor Productivity. New Evidence from the Italian Regions
2003
This paper analyses the relationship between industrial total factor productivity and public capital across the 20 Italian administrative regions. We add upon the existing literature in a number of ways: we analyse a longer period (1970-98); we allow for the role of human capital accumulation; we test for the existence of a long-run relationship between total factor productivity and public capital (through the panel techniques suggested in Im et al., 2001; and for weak exogeneity of public capital (Urbain, 1992); we assess the significance of public capital within a non-parametric set-up based on the Free Disposal Hull. The results confirm that public capital has a significant impact on the evolution of total factor productivity, particularly in the Southern regions. This impact is to be mainly ascribed to the core infrastructures (road and airports, harbours, railroads, water and electricity, telecommunications). Also, core infrastructures are found to be weakly exogenous.
Public capital and total factor productivity: New evidence from the Italian regions, 1970–98
Regional Studies, 2005
This paper analyses the relationship between industrial total factor productivity and public capital across the 20 Italian administrative regions. We add upon the existing literature in a number of ways: we analyse a longer period (1970-98); we allow for the role of human capital accumulation; we test for the existence of a long-run relationship between total factor productivity and public capital (through the panel techniques suggested in Im et al., 2001; and for weak exogeneity of public capital (Urbain, 1992); we assess the significance of public capital within a non-parametric set-up based on the Free Disposal Hull. The results confirm that public capital has a significant impact on the evolution of total factor productivity, particularly in the Southern regions. This impact is to be mainly ascribed to the core infrastructures (road and airports, harbours, railroads, water and electricity, telecommunications). Also, core infrastructures are found to be weakly exogenous.
Empirical Economics, 2001
We analyze the dynamic relationship between public investment and output. Whereas existing empirical studies on the e¨ects of public capital typically rely on single-equation models of the private sector, we investigate the role of public investment in an economy by examining impulse responses derived from vector autoregressions. Using data from six industrial countries, we speci®cally examine the following questions: does higher public investment lead to GDP increases; is there reverse causation from output to public investment; and what are the e¨ects of expenditure-neutral budget shifts from public consumption to public investment.
Public / Private Investment Linkages: A Multivariate Cointegration Analysis
The Pakistan Development Review, 2005
The issue of whether public investment crowds out or crowds in private investment has received considerable attention in the economic literature. Most of the empirical studies that examined the long run stable association between public and private investment have focused on examining this relationship for the developed countries with very little attention on the developing countries. The empirical results of these studies, however, are highly controversial. The existing empirical studies in this area can be divided into three categories. The studies in the first category including Barro (1974), Kormendi (1983), and Feldstein (1982) have examined the empirical implications of the Ricardian equivalence hypothesis (REH). The empirical results of most of the studies in this category were supportive of the REH. Seater (1993) argues that good empirical studies generally provide evidence in support of the REH; however, some studies refute it owing to the lake of econometric accuracy.