Is infrastructure capital productive? A dynamic heterogeneous approach

Cesar Calderon (), Enrique Moral-Benito and Luis Servén

No 1103, Working Papers from Banco de España

Abstract: This paper offers an evaluation of the output contribution of infrastructure. Drawing from a large data set of infrastructure stocks covering 88 countries and spanning the years 1960-2000, and using a panel time-series approach, the paper estimates a long-run aggregate production function relating GDP to human capital, physical capital, and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport, power and telecommunications. Tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector, which we interpret as the long-run production function. Estimation of its parameters is performed using the pooled mean group (PMG) estimator, which allows for unrestricted short-run parameter heterogeneity across countries while imposing the (testable) restriction of long-run parameter homogeneity. The long-run elasticity of output with respect to the synthetic infrastructure index ranges between 0.07 and 0.10. The estimates are highly significant, both statistically and economically, and robust to alternative dynamic specifications and infrastructure measures. There is little evidence of long-run parameter heterogeneity across countries, whether heterogeneity is unconditional, or conditional on their level of development, population size, or infrastructure endowments.

Keywords: Infrastructure; panel cointegration; parameter heterogeneity (search for similar items in EconPapers)
JEL-codes: E23 H54 O40 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2011-03
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Related works:
Journal Article: Is infrastructure capital productive? A dynamic heterogeneous approach (2015)
Working Paper: Is infrastructure capital productive ? a dynamic heterogeneous approach (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1103

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