Productivity Effects of Public Capital Maintenance: Evidence from U.S. States
19 Pages Posted: 21 Nov 2014
Date Written: January 2015
This article assesses the productivity effects of infrastructure operation and maintenance (O&M) spending by state and local governments in the 48 contiguous U.S. states over the period 1978–2000. We explicitly account for transboundary spillovers of capital and O&M spending and follow a semiparametric methodology that allows us to estimate state-specific output elasticities. We find strong evidence that in all 48 states the cross-state spillover effects of O&M outlays on productivity exceed their within-state impacts and are substantially higher than the spillover effects of capital expenditure.
JEL Classification: C14, E22, E62, H76, O11, O47, R11
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