Public Capital and Economic Performance: Evidence from Italy

IGIER Working Paper No. 163

30 Pages Posted: 26 Jun 2000

See all articles by Eliana La Ferrara

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; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Bocconi University - Department of Economics; Centre for Economic Policy Research (CEPR)

Federico Bonaglia

Organization for Economic Co-Operation and Development (OECD) - Development Centre (DEV)

Date Written: May 2000

Abstract

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.

JEL Classification: H54, O47, C50

Suggested Citation

La Ferrara, Eliana and Marcellino, Massimiliano and Bonaglia, Federico, Public Capital and Economic Performance: Evidence from Italy (May 2000). IGIER Working Paper No. 163. Available at SSRN: https://ssrn.com/abstract=230469 or http://dx.doi.org/10.2139/ssrn.230469

Eliana La Ferrara (Contact Author)

University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) ( email )

Via Roentgen 1
Milan, 20136
Italy
+39 02 5836 3328 (Phone)
+39 02 5836 3302 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Massimiliano Marcellino

European University Institute ( email )

Villa Schifanoia
133 via Bocaccio
Firenze (Florence), Tuscany 50014
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Federico Bonaglia

Organization for Economic Co-Operation and Development (OECD) - Development Centre (DEV) ( email )

2 rue Andrea Pascal
75016 Paris
France
+33 1 4524 9603 (Phone)
+33 1 4524 7943 (Fax)

HOME PAGE: http://www.oecd.org/dev

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