Public Capital and Economic Performance: Evidence from Italy
Eliana La Ferrara
University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER); Centre for Economic Policy Research (CEPR)
Massimiliano Giuseppe Marcellino
European University Institute; Bocconi University - Department of Economics; Centre for Economic Policy Research (CEPR)
Organization for Economic Co-Operation and Development (OECD) - Development Centre (DEV)
IGIER Working Paper No. 163
This paper addresses the issue of whether and by how much public capital can enhance economic performance. We apply different methodologies to Italian regional data for the period 1970-1994. The results are presented for Italy as a whole and for different macroregions, and for individual categories of public capital. For the Center and the South, the methodologies employed indicate a positive contribution of infrastructure investment to TFP growth, output, and cost reduction. However, the magnitude of the cost reducing effect does not seem large enough to outweigh the social user cost of public capital. Also, we get mixed results on which types of infrastructure are most effective. Overall, investment in transportation appears to be the most productive: railways in the North and roads in the Center and South are the categories that mostly contributed to TFP growth.
Number of Pages in PDF File: 30
JEL Classification: H54, O47, C50working papers series
Date posted: June 26, 2000
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