Does infrastructure have a transitory or longer-term impact? Evidence from China

Yin-Fang Zhang and Shengbao Ji

Economic Modelling, 2018, vol. 73, issue C, 195-207

Abstract: It is ambiguous in the literature whether infrastructure only has transitory effects by lifting the level of aggregate output, or a longer-term impact by boosting the growth rate of output. The paper attempts to shed empirical light on this issue by looking at the case of China. It employs an infrastructure-augmented production function framework and a growth regression model, and adopts panel threshold regressions to address non-linearity. The results show that infrastructure stocks (except railways) are more productive than other physical capital in raising output levels, but not so when it comes to the effect on long-term growth rates. The analysis also finds that infrastructure's productivity depends on whether it is oversupplied or in shortage relative to non-infrastructure capital.

Keywords: Infrastructure; Economic growth; Panel threshold-effect regression; China (search for similar items in EconPapers)
JEL-codes: L9 O1 O4 R1 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:73:y:2018:i:c:p:195-207

DOI: 10.1016/j.econmod.2018.03.014

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