Is infrastructure capital really productive? Non-parametric modeling and data-driven model selection in a cross-sectionally dependent panel framework

Antonio Musolesi (), Giada Andrea Prete () and Michel Simioni ()
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Antonio Musolesi: University of Ferrara – Department of Economics and Management (Ferrara, Italy); SEEDS
Giada Andrea Prete: University of Ferrara – Department of Economics and Management (Ferrara, Italy); SEEDS
Michel Simioni: MOISA, INRAE, University of Montpellier and TSE, University of Toulouse, France

No 522, SEEDS Working Papers from SEEDS, Sustainability Environmental Economics and Dynamics Studies

Abstract: This paper provides a broad replication of Calderón et al. (2015). We address some complex and relevant issues, namely functional form, non-stationary variables and cross-sectional dependence. In particular, by adopting the CCE framework, we consider both parametric – static and dynamic - and non-parametric specifications, thus allowing for different degrees of flexibility. Contrary to Calderón et al. (2015), we find a lack of significance of the infrastructure index, with an estimated elasticity very close to zero for all estimates. Moreover, by employing the data-driven model selection procedure proposed by Gioldasis et al. (2021), it is found that non-parametric specifications provide the best predictive performance and that CCE models always overperform with respect to traditional panel data methods that employ cross-sectional demeaning to account for cross-sectional dependence.

Keywords: Cross-sectional dependence; factor models; moving block bootstrap; non-parametric regression; spline functions; public capital hypothesis (search for similar items in EconPapers)
JEL-codes: C23 C5 O4 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2022-03, Revised 2022-03
New Economics Papers: this item is included in nep-ban, nep-eff and nep-ore
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http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0522.pdf First version, 2022 (application/pdf)
http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0522.pdf Revised version, 2022 (application/pdf)

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