Is Infrastructure Productive? Evaluating the Effects of Specific Infrastructure Projects on Firm Productivity within New Zealand
Motu Working Paper No. 05-14
49 Pages Posted: 25 Jun 2006
Date Written: November 2005
The paper investigates the feasibility of using a variant of the spatial equilibrium model to estimate the productivity effects of a specific infrastructure project in New Zealand. Policy makers are interested in the marginal effects of infrastructure investment on productivity and an evaluation of such effects would provide a useful check on the appropriateness and adequacy of current decision rules and institutions. To date, there appear to be no examples of using a spatial equilibrium model to estimate the productivity effects of a specific infrastructure project. However, the analysis in this paper suggests that such an approach is feasible. There is a range of data and estimation issues that needs to be addressed in the use of a spatial equilibrium model for this purpose, but we find that a reasonably useful range of data is available in New Zealand. The next step in determining feasibility is to select a particular infrastructure project, and to develop an empirical model based on available data.
Keywords: Infrastructure, regional economics, land and labour markets
JEL Classification: H54, R11, R23, R31
Suggested Citation: Suggested Citation