On the long run effect of public capital on aggregate output: Estimation and sensitivity analysis

Raymond G. Batina ()
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Raymond G. Batina: Department of Economics, Washington State University, Pullman, WA 99164-4741, USA

Empirical Economics, 1999, vol. 24, issue 4, 717 pages

Abstract: We undertake a sensitivity analysis of the productivity of public capital under the aggregate production function approach. Several proxies are used for the private inputs and for public capital, several dummy variables are included to adjust for energy price shocks, newly revised data is studied, and Stock and Watson's dynamic OLS estimator is used. Our main results are that the productivity of public capital depends critically on the proxies used, the effects are typically smaller than the early estimates, and omitting the oil price shocks introduces significant upward bias in the measured productivity of public capital.

Keywords: Public capital; sensitivity analysis; DOLS (search for similar items in EconPapers)
JEL-codes: C32 E23 E25 H41 H54 (search for similar items in EconPapers)
Date: 1999-11-24
Note: received: January 1998/final version received: June 1999
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Citations: View citations in EconPapers (8)

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