Efficiency of Infrastructure Provision: Australia, States and Territories

45 Pages Posted: 12 May 2014

See all articles by Amani Elnasri

Amani Elnasri

UNSW Australia Business School, School of Economics

Date Written: May 1, 2014

Abstract

This paper examines the optimality of the provision of economic infrastructure in Australia using a system of Euler equations to represent intertemporal efficiency conditions. Employing Generalised Method of Moments, our estimation results suggest that dealing with individual types of infrastructure investments at State level is helpful for reaching realistic conclusions about infrastructure provision. In particular, the paper finds that while the efficiency conditions are satisfied at aggregate level, a disaggregate analysis which examines individual components of economic infrastructure reveals sub-optimality in the provision of some types of infrastructure across the States. In addition, contrary to other methods, our efficiency approach produces a quite sensible estimate of the infrastructure effect with an annual average rate of return of about 8 percent.

Keywords: Economic infrastructure, Efficiency conditions, Disaggregate analysis

JEL Classification: H54, H42

Suggested Citation

Elnasri, Amani, Efficiency of Infrastructure Provision: Australia, States and Territories (May 1, 2014). UNSW Australian School of Business Research Paper No. 2014-25, Available at SSRN: https://ssrn.com/abstract=2432804 or http://dx.doi.org/10.2139/ssrn.2432804

Amani Elnasri (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

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