Is All Infrastructure Investment Created Equal? The Case of Portugal

Alfredo Pereira and Rui Pereira

No 75, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: Using a newly-developed data set, we analyze the effects of infrastructure investment on economic performance in Portugal. A vector-autoregressive approach estimates the elasticity and marginal products of twelve types of infrastructure investment on private investment, employment and output. We find that the largest long-term accumulated effects come from investments in railroads, ports, airports, health, education, and telecommunications. For these infrastructures, the output multipliers suggest that these investments pay for themselves through additional tax revenues. For investments in ports, airports and education infrastructures, the bulk of the effects are short-term demand-side effects, while for railroads, health, and telecommunications, the impact is mostly of a long term and supply side nature. Finally, investments in health and airports exhibit decreasing marginal returns, with railroads, ports, and telecommunications being relatively stable. In terms of the other infrastructure assets, the economic effects of investments in municipal roads, electricity and gas, and refineries are insignificant, while investments in national roads, highways, and waste and waste water have positive economic effects, but too small to improve the public budget. Clearly, from a policy perspective, not all infrastructure investments in Portugal are created equal.

Keywords: Infrastructure Investment; Multipliers; Budgetary Effects; VAR; Portugal (search for similar items in EconPapers)
JEL-codes: C32 E22 E62 H54 H60 O47 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2017-08, Revised 2017-08
New Economics Papers: this item is included in nep-mac and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://www.gee.gov.pt/RePEc/WorkingPapers/GEE_PAPERS_75.pdf First version, 2017 (application/pdf)

Related works:
Working Paper: Is All Infrastructure Investment Created Equal? The Case of Portugal (2017)
Working Paper: Is All Infrastructure Investment Created Equal? The Case of Portugal (2015)
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