Is All Government Capital Productive?

Abstract

Examination of total U.S. government capital suggests that only certain of its components, namely, government-owned but privately operated capital, government enterprise capital, and government highway capital, directly contribute to the production of U.S. private sector output. During 1950-1969, positive highway capital growth raised the average growth rate of private output from 1.7 percent to 2.2 percent. In contrast, in the productivity slowdown period, 1970-1989, negative highway capital growth reduced the average growth rate of private output from 1.4 percent to 1.3 percent.