Public Infrastructure, Private Input Demand, and Economic Performance in New England Manufacturing

Catherine Morrison Paul and Amy Schwartz

Journal of Business & Economic Statistics, 1996, vol. 14, issue 1, 91-101

Abstract: The economic performance impacts of public infrastructure investment involve the input-specific effects of such investment. The authors explore these impacts by evaluating input substitution patterns in New England manufacturing. Using a cost-based methodology, they find that public capital expenditures provide short-run cost-saving benefits that exceed the associated investment costs due to substitutability between public capital and private inputs. Over time, however, stimulating investment in private capital increases economic performance more effectively than public capital expenditures alone and in fact reduces the cost-incentive for such expenditures. Also, growth in output motivated by infrastructure investment overrides short-run substitutability, increasing employment opportunities.

Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:bes:jnlbes:v:14:y:1996:i:1:p:91-101

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