Does infrastructure really cause growth?: the time scale dependent causality nexus between infrastructure investments and GDP

Niclas Krüger

No 2012:15, Working papers in Transport Economics from CTS - Centre for Transport Studies Stockholm (KTH and VTI)

Abstract: This paper investigates the relationship between infrastructure investments and economic activity in Sweden for the period 1800-2000. In order to overcome the problem of endogeneity, independent time scales are used to analyze the relationship. The paper also examines the dynamics between the variables by testing for causality in the Granger sense and constructing a vector autoregressive model separately for each time scale. The finding is that the causality nexus between growth and transport infrastructure investment is timescale-dependent since it reverses in a comparison of the short-run dynamics (2-4 years) and the longer-run dynamics (8-16 years). This causality reversal is unique for infrastructure investments compared to investments in other sectorsof the economy.

Keywords: Infrastructure; GDP growth; Investment; Time scale decomposition (search for similar items in EconPapers)
JEL-codes: E22 E32 N70 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-05-04
New Economics Papers: this item is included in nep-cwa, nep-mac, nep-tre and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:ctswps:2012_015

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