The productivity of public capital: Evidence from Japan’s 1994 electoral reform |
| |
Authors: | Daiji Kawaguchi Fumio Ohtake Keiko Tamada |
| |
Institution: | aFaculty of Economics, Hitotsubashi University, Naka 2-1, Kunitachi, Tokyo 186-8601, Japan;bInstitute of Social and Economic Research, Osaka University, 6-1 Mihogaoka, Ibaraki, Osaka 567-0047, Japan;cFaculty of Economics, Fukuoka University, Nanakuma 8-19-1, Jonan, Fukuoka 814-0180, Japan |
| |
Abstract: | This paper estimates the causal effect of public capital stock on Production, using Japanese prefectural data. We first articulate the difficulty of consistently estimating the regional-level production function with public capital that results from the endogeneity of the public capital stock amount. The public capital amount could be endogenous because of the central government’s political decision-making process of public capital allocation or the local government’s budgetary constraints.Japan’s electoral reform in 1994 offers an exogenous variation in the public capital investment across regions, and we exploit this event to estimate the causal effect of public capital on production. The reform drastically changed the distribution of political representation in the Lower House across regions, and it accordingly changed the allocation of public capital across regions as well. We cannot reject the null hypothesis that public capital is not productive based on the estimates from this natural experimental identification strategy. |
| |
Keywords: | Public capital Productivity Political economy Instrumental variable estimation |
本文献已被 ScienceDirect 等数据库收录! |
|