Public Infrastructure and Productivity: Updating the Canadian Case

Matan Sirota

No 2022-04, CSLS Research Reports from Centre for the Study of Living Standards

Abstract: This report revisits the public capital hypothesis in Canada using a classical model with updated estimation techniques. Provincial panel data spanning 1998-2020 are leveraged to determine the effect of public infrastructure on business sector output and productivity. Several specifications (levels and first-differences) of the Cobb-Douglas production function are estimated using OLS and FGLS techniques that account for heteroskedasticity, autocorrelation, cross-sectional dependence, and province-specific effects. I find output and productivity elasticities for aggregated public infrastructure to be predominantly insignificant from zero. A detailed disaggregation of public infrastructure by asset type and function also yields largely insignificant results.

Keywords: public infrastructure; productivity; Canada; public capital; Cobb-Douglas; provincial panel data; infrastructure elasticity; OLS; FGLS; business sector (search for similar items in EconPapers)
Date: 2022-09
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