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http://ssrn.com/abstract=1871578
 
 

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Is Infrastructure Capital Productive? A Dynamic Heterogeneous Approach


Cesar Calderon


World Bank

Enrique Moral-Benito


Bank of Spain; Universidad Carlos III de Madrid

Luis Servén


World Bank - Office of the Chief Economist; World Bank - Development Research Group (DECRG)

June 1, 2011

World Bank Policy Research Working Paper No. 5682

Abstract:     
This paper offers an empirical evaluation of the output contribution of infrastructure. Drawing from a large data set on infrastructure stocks covering 88 countries and spanning the years 1960-2000, and using a panel time-series approach, the paper estimates a long-run aggregate production function relating GDP to human capital, physical capital, and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport, power, and telecommunications. Tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector, which is taken to represent the long-run production function. Estimation of its parameters is performed using the pooled mean group estimator, which allows for unrestricted short-run parameter heterogeneity across countries while imposing the (testable) restriction of long-run parameter homogeneity. The long-run elasticity of output with respect to the synthetic infrastructure index ranges between 0.07 and 0.10. The estimates are highly significant, both statistically and economically, and robust to alternative dynamic specifications and infrastructure measures. There is little evidence of long-run parameter heterogeneity across countries, whether heterogeneity is unconditional, or conditional on their level of development, population size, or infrastructure endowments.

Number of Pages in PDF File: 34

Keywords: Transport Economics Policy & Planning, Economic Theory & Research, Banks & Banking Reform, Public Sector Economics, Infrastructure Economics

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Date posted: June 25, 2011  

Suggested Citation

Calderon, Cesar and Moral-Benito, Enrique and Servén, Luis, Is Infrastructure Capital Productive? A Dynamic Heterogeneous Approach (June 1, 2011). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2011. Available at SSRN: http://ssrn.com/abstract=1871578

Contact Information

Cesar A. Calderon
World Bank ( email )
1818 H Street NW
Washington, DC 20433
United States
202-458-7214 (Phone)
202-522-7528 (Fax)
HOME PAGE: http://www.worldbank.org/laceconomist
Enrique Moral-Benito
Bank of Spain ( email )
Alcala 50
Madrid 28014
Spain
Universidad Carlos III de Madrid ( email )
CL. de Madrid 126
Madrid, Madrid 28903
Spain
Luis Servén
World Bank - Office of the Chief Economist ( email )
Washington, DC 20433
United States
202-473-7451 (Phone)
202-522-3518 (Fax)
HOME PAGE: http://www.worldbank.org/research/bios/lserven.htm
World Bank - Development Research Group (DECRG)
1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
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