Is Infrastructure Capital Productive? A Dynamic Heterogeneous Approach
34 Pages Posted: 20 Apr 2016
There are 2 versions of this paper
Is Infrastructure Capital Productive? A Dynamic Heterogeneous Approach
Date Written: June 1, 2011
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.
Keywords: Transport Economics Policy & Planning, Economic Theory & Research, Banks & Banking Reform, Public Sector Economics, Infrastructure Economics
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Effects of Infrastructure Development on Growth and Income Distribution
By César A. Calderón and Luis Servén
-
Investing in Infrastructure: What is Needed from 2000 to 2010?
By Marianne Fay and Tito Yepes
-
Infrastructure in Latin America
By César Calderón and Luis Servén
-
Trends in Infrastructure in Latin America, 1980-2001
By César A. Calderón and Luis Servén
-
The Social Rate of Return on Infrastructure Investments
By David Canning and Esra Bennathan
-
By Esther Duflo and Rohini Pande