Is All Infrastructure Investment Created Equal? The Case of Portugal

Alfredo Pereira and Rui Pereira

No 156, Working Papers from Department of Economics, College of William and Mary

Abstract: In this paper we analyze the effects of infrastructure investment on economic performance in Portugal using a newly developed data set. We employ a vector autoregressive approach to estimate the elasticity and marginal products of investments on twelve different types of infrastructure investment on private investment, employment and output. We find that the largest long-term accumulated effects come from investments in railroads, ports, airports, health, education, and telecommunications. For all of these infrastructures, the output multipliers are sizable enough to suggest that these investments would pay for themselves in the form of additional tax revenues. We find also that for investments in airports and health infrastructures the bulk of the effects are short-term demand side effects while for railroads and health the bulk of the effects come from long-term supply side effects. Finally, investments in health and airports show a clear pattern of decreasing marginal returns with railroads, ports, and telecommunications showing a relative stable pattern. In terms of the other infrastructure assets, we find that the economic effects of investments in municipal roads, highways, and electricity and gas are not significant or relevant. Investments in national roads, waste and waste water, and refinery infrastructures have positive economic effects but not large enough to also have a positive budgetary effects. Clearly, not all infrastructure investments are created equal along several and rather relevant dimensions from a policy perspective.

Keywords: Infrastructure Investment; Multipliers; Economic Performance; Budgetary Effects; VAR; Portugal. (search for similar items in EconPapers)
JEL-codes: C32 E22 E62 H54 H60 O47 O52 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2015-02-05
New Economics Papers: this item is included in nep-eur, nep-mac and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://economics.wm.edu/wp/cwm_wp156.pdf (application/pdf)

Related works:
Working Paper: Is All Infrastructure Investment Created Equal? The Case of Portugal (2017)
Working Paper: Is All Infrastructure Investment Created Equal? The Case of Portugal (2017)
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