Fixing Swiss Potholes: The Importance of Improvements

15 Pages Posted: 26 Feb 2002

See all articles by Michael Dueker

Michael Dueker

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Andreas M. Fischer

Swiss National Bank; Centre for Economic Policy Research (CEPR)

Date Written: January 2002

Abstract

The objective of this note is to document the importance of improvements relative to the other forms of capital spending and to determine whether improvements have similar cyclical properties as maintenance and repair. To shed some light on these issues, we look at a unique data set on Swiss road spending. The data on road spending are broken down into new roads, road improvements, and road maintenance and repair (hereafter road maintenance). The long-run evidence finds that road improvement is larger in size than road maintenance and exhibits similar dynamic properties as road maintenance. This result strengthens the view of McGratten and Schmitz (1999) that countercyclical spending of firms on maintenance (and on improvement) of existing capital is too large to be ignored.

Keywords: Maintenance and repair, improvements, capital utilization

JEL Classification: E22, E30

Suggested Citation

Dueker, Michael and Fischer, Andreas M., Fixing Swiss Potholes: The Importance of Improvements (January 2002). Available at SSRN: https://ssrn.com/abstract=301870

Michael Dueker (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

Andreas M. Fischer

Swiss National Bank ( email )

Borsenstrasse 15
CH-8022 Zurich
Switzerland
+41 1 631 3294 (Phone)
+41 1 631 3901 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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