Estimating the Contribution of Disaggregated Public Capital to Productivity in Each Industry

Dong Ki Min
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Dong Ki Min: Cornell University

Korean Economic Review, 1997, vol. 13, issue 2, 179-192

Abstract: Previous tests of the effect of public capital on multifactor productivity using Solow's growth accounting technique yield differing estimates of this relationship. This paper reconciles these results and shows why they differ. I highlight the pas-sible problems when Solow's technique is used in empirical work and the prob-lems with previous works. To solve these problems, the paper uses the Malmquist Index to estimate multifactor productivity growth and shows a method to disaggregate this growth which, in turn, I use to estimate the output elasticity of public capital My results show than contrary to recent work, the effect of public capital on output is positive and significant However, the effect of disaggregated public capital on each industry is smaller compared to its effect on total industry. The paper finds that the magnitude of this effect of each type of public capital varies across the different types of public capital.

Keywords: Public Capital; Productivity; Multifactor (search for similar items in EconPapers)
JEL-codes: H5 R3 (search for similar items in EconPapers)
Date: 1997
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