Infrastructure investment and Canadian manufacturing productivity

This paper examines the relationship between Canadian public infrastructure and private output using a Constant Elasticity and Substitution-Translog (CES-TL) cost model to describe the interaction of the public and private sectors.

We find public capital a substitute for private capital within the Canadian manufacturing sector. Additionally, the services of public capital enhance the productivity of private capital. Canadian manufacturing costs are characterized by economies of scale, indicating that less than optimal plant sizes dominated Canadian manufacturing sector during the study period. Advances in disembodied technical progress are also indicated.     

The impact of public capital on the US private economy: new evidence and analysis

This paper presents new evidence on the impact of public capital on the productivity of the US private sector. Using a production function approach, we estimate the impact of public investment on private capital productivity, specifically addressing the empirical critiques of earlier studies. We find evidence of a cointegrating relationship in a dynamic specification of an empirical model that includes public infrastructure as a factor of production, indicating the existence of a long‐run relationship between the US public capital stock and the productivity of the private capital stock. The results are used to explore how the decline in the growth rate of the public capital stock would have affected the performance of the private sector.     

Labour hoarding,employment and unemployment in British manufacturing industry

The impact of the provision of public infrastructure on private economic activity is examined. Using a flexible functional form of a cost function with public infrastructure as an additional external input the paper estimates the shadow-price of public infrastructure services for the manufacturing, trade and transport and the construction industries. The results indicate significant cost savings that result from the provision of public infrastructure services. In addition, the paper investigates both empirically as well as theoretically, the question whether the neglect of the provision of public capital within the growth accounting framework provides an explanation for the generally observed productivity slowdown.     

The Impact of Public Infrastructure on the Productivity of the Chilean Economy

The aim of this study is to assess the effect of the change in infrastructure capital on the cost structure of the Chilean economy, and thereby on productivity, differentiating between two key institutional periods. A further aim is to establish the extent to which infrastructure capital formation affects private capital. The authors use an econometric estimation of the cost elasticity of infrastructure. Conclusions indicate that an increased infrastructure capital reduces the production cost of the economy, thereby increasing productivity, mostly in the second period. In turn, especially in this latter period, infrastructure capital formation appears to assert both a positive cost‐share effect on private capital and a negative cost‐share effect on labor. These effects can be explained to a large extent by the significant differences between the institutional structures of the two consecutive periods studied.     

Forms of Explanation; Rethinking the Questions in Social Theory

The aim of this study is to investigate whether the so-called crowding in effects of complementarity or the crowding out effects of substitution occurred between public investment and private investment in Brazil from 1982 to 2013. This will be carried out through a theoretical debate on the investment general dynamics and an econometric analysis of vector error correction (VEC) model for the Brazilian case. The trajectory of the Brazilian economy and the empirical results show the presence of crowding in between public and private investments in the period, in accordance with the Post-Keynesian approaches. The crowding in is justified by the effects on demand via the Keynesian multiplier and via the expansion of the domestic market (particularly provided by infrastructure) and by the effects on the supply of private capital through the reduction of production costs, the increase in productivity, and through structural changes facilitated by public policy. Complementarity with regard to both the investments of the public administration and of federal government-owned/controlled enterprises is confirmed. Furthermore, a significant causal relationship is observed between public investment and the output of industrial manufacturing, which, from the structuralist perspective, is a sector that is considered a driving force of the economy. The special contributions of this paper are its time series for public investment and the variety of models that show crowding in between public and private investment.     

Should mobile capital pay for public infrastructure investment?

The paper contributes to the discussion of fiscal competition with infrastructure goods. We explicitly focus on the costs of providing public infrastructure capital that appear in the public budget as investment. Thus we analyse the problem in a dynamic framework. Public infrastructure is considered as a marginal product complement to private capital. A central result of the model is that the fact that public capital is a complement to private capital, so that an increase in the supply of public capital ceteris paribus improves the marginal productivity of private capital, cannot be used as an argument to support a source tax. The so-called indirect productivity effect on private capital induced by public inputs does not justify the taxation of mobile capital. Rather, the efficiency of a source tax on mobile capital income depends on the question of whether or not the public input generates a factor rent to private capital.

Assessing the contribution of public capital to private production: Evidence from the German manufacturing sector

Using time-series cross-section data from the manufacturing sector of the 11 West German 'Bundesländer' (Federal States) from 1970 to 1996, I examine the impact of public capital on private production. My econometric analysis explicitly takes into account four of the most frequent specification issues in the context of time-series crosssection data analysis: serial correlation, groupwise heteroscedasticity, cross-sectional correlation and non-stationarity of data. For all approaches and tested specifications, I find that public capital is a significant input for production in the manufacturing sector. Moreover, I find that differences in public capital endowment can explain long-term differences in productivity across the Bundesländer. One tentative conclusion that can be drawn from this finding is that differences in public capital endowment might also explain a part of the still-existing productivity gap between manufacturing in East and West Germany. However, I emphasise that the existence of positive effects of public capital on private production is a necessary, but not a sufficient condition for concluding that public investments should be boosted in the future.     

An empirical study on public capital spillovers from the USA to Canada

The effect of public capital on private sector productivity has received much attention in the literature. The impact of an adjacent country's public capital on domestic productivity has, however, not been previously examined. This paper attempts to fill this gap by examining the possibility of such spillovers from the USA to Canada. Due to close proximity of both countries, the hypothesis of the paper is that these spillovers are important. A production function model introduces US public capital as an exogenous variable and tests for its significance. The results indicate positive spillovers from the USA public capital to Canadian productivity.     

The influence of ownership on the cost of bus service provision in Switzerland - an empirical illustration

In deregulated transport markets, a firm's ownership status and management system represent an important issue. Property right theory suggests that productivity and performance are higher in the private than in the public sector. In Switzerland, providers of bus transportation are traditionally corporations, though a large part of their equity shares are still held by the public sector (federal government, cantons, municipalities). This paper examines the potential impact of ownership on the cost of bus service provision for a sample of private, public and mixed bus companies in Switzerland. The estimation of a translog cost model has been considered for 34 bus transit companies observed over 5 years (1991–1995). The results only partially confirm that if the private sector holds shares in the company's capital, efficiency is enhanced. In addition, measures of economies of scale and density are derived and discussed within the actual public transport policy.     

Is Public Capital Productive in China? Evidence from a Panel of Chinese Provinces

In addition to the direct productivity effect, public capital also has an indirect effect on private capital stock and labor input. This paper offers an evaluation of both the direct and indirect effects of Chinese public capital by applying a trans-log aggregate production function including public capital stock to a panel of regional data from 1986–2009. Moreover, we calculate the impact of public capital on regional total factor productivity (TFP) performance by introducing a system GMM estimation. The results show that the output elasticity of Chinese public capital stock is significantly positive, but decreasing year on year, and public capital is found to be a substitute for labor but complementary to private capital input. Finally, public capital has a significant positive effect on regional TFP performance.     

A multivariate time series analysis of the United States aggregate production function

This study examines the effects of hours of work per unit of private sector capital, the relative price of energy, government capital per unit of private sector capital, and inflation on private sector output per unit of capital in the U.S. over the period 1952–90. A small vector autoregressive model that comprises the variables typically employed in single-equation estimates of the aggregate production function is used. Variance decompositions and cumulative impulse response functions indicate that hours of work per unit of private sector capital, the relative price of energy, and the inflation rate have significant effects on private sector output per unit of capital over the 1952–90 period. However, there is no evidence of a significant effect for government capital per unit of private capital. An historical decomposition that begins in 1973 with the emergence of a “productivity slump” and continues through 1990 indicates that shocks to hours of work per unit of capital, the relative price of oil, and inflation appear important in explaining output per unit of capital but shocks to government capital are not important.     

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

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. First version received: January 1998/final version received: June 1999     

R&D,public innovation policy,and productivity: The case of danish manufacturing

The purpose of this paper is to investigate the relationship between private R&D, public innovation support transferred to the private sector, and productivity in Danish manufacturing. Two main conclusions are established. First, public innovation support has a positive and significant effect on private R&D expenditures with an estimated elasticity of 0.062. Second, the indirect effect on productivity from public innovation support is reflected in a positive point estimate which is found to be robust to different specifications of R&D capital.     

Public and private capital productivity in Russia: a non-parametric investigation

The productivity of public capital has been very popular research topic for US and other OECD countries, while studies using data from transitional countries are almost non-existent. In this paper, we analyze the productivity of public and private capital in Russia with parametric and non-parametric regression methods utilizing a unique regional level panel data from 2003 to 2007. More specifically, we assess public capital’s spillover effects, i.e., the productivity of public capital on private output, as well as the productivity of different capital ownership types on total output. We find that public capital has a clear positive effect on private output. However, our estimates and test statistics show that parametric methods are not able to grasp vast non-linearities and heterogeneity present among Russian regions, while the non-parametric approach can capture these important features of the data better. Furthermore, we find that multicollinearity is an important methodological problem which should be accounted for in analysis concerning capital data. Our results also suggest that the impact of public capital in Russia is heterogeneous in the sense that for some regions its contribution to private output is insignificant or even negative while it has a considerable positive role for most regions. Concerning the capital elasticities of total output, we find that public capital is less productive than private capital and roughly as productive as joint private-public capital.     

Privatization and economic growth in Australia: the shorthand of a long process

The impact of privatization on economic growth has been little investigated relative to disaggregated approaches. A growth accounting framework is used here to investigate the impact of privatization on growth for the Australian economy. The contribution of public capital to the private sector and whether the growth process is endogenous or Solow is evaluated. Separate measures of public and private capital are computed in order to estimate their impacts with labour on Australian gross domestic product (GDP) growth for the period 1960 to 2003. A simple growth rates version is found preferred by stationarity and other tests. Labour growth appears to strongly positively influence the growth of GDP. In contrast, public capital growth has no statistically significant effect on GDP growth, or on private capital productivity. The data are consistent with the hypothesis that the coefficients of the growth equation are the same before and during privatization.     

财政政策、货币政策与国外经济援助

本文通过把国外经济援助分成直接对私人的经济援助和直接对政府的经济援助来讨论这两类经济援助对政府财政政策和货币政策的影响。我们发现对私人的经济援助的增加可以使得私人消费水平和政府公共消费水平增加 ,但是它也导致政府收入税税率和通货膨胀率的提高 ;另一方面 ,对政府的经济援助增加可以使得均衡时的私人资本存量、私人消费水平和政府公共消费水平增加 ,同时可以使得均衡时的收入税税率和通货膨胀率下降。     

The effects of public infrastructure on the cost structure of Spanish industries

This paper examines the impact of public infrastructures on the performance of Spanish private business at a disaggregated industry level. We use duality theory to recover the productivity effects of public capital by calculating the cost saving effects that are associated to public services. Using a translog cost function we present panel estimates for 14 Spanish industries during the period 1980–1991. Our results strongly suggest that public capital formation can be considered to be an instrument to improve competitiveness by reducing production costs. However, the results also indicate that there is a technologically induced labor saving effect through higher public investment. Furthermore, our estimates suggest that a distinction among industries is of importance because the effects of public infrastructures vary across industries considerably.     

Public Investment Rules and Endogenous Growth with Empirical Evidence From Canada

This paper examines theoretically and empirically the effects of public investmentrules on output growth in an economy with private and public capital. It is shownthat the decisions on public capital formation are closely associated with the growthrate of output and generate endogenous growth. A permanent change in the policyrule implies a new long-run growth rate of output, but the economy will onlygradually approach the new steady-state due to adjustment costs in private capitalaccumulation. The model predictions are tested using data from Canada for theperiod 1955-1999. The data support the endogenous growth hypothesis and thetwo central assumptions of the model: (i) the growth rate of output follows closelythe rate of infrastructure formation and (ii) private capital formation also followsthe rate of infrastructure formation but adjusts with a delay.     

The farmer and the money economy: The role of the private sector in the agricultural development of LDCs

The world's food/people balance is precarious now and will become more precarious in the future, in terms of both supply and price.The grain producing industrial countries have come close to reaching their production potential. The solution lies in exploiting the production capacity of the developing world.At present only half of the world's good arable land is being farmed. Most of the other half does not have the necessary infrastructure, and opening it up to cultivation will require major capital investment. This means that a serious political commitment is required, primarily by LDC governments. There are concomitants for aid policies as well.The key action-oriented question is where, and how, productivity increase can take place. The authors suggest that the most effective method requires involvement of the private sector, specifically the participation of small landholders, working 1–5 acres, grouped around a corporate core. The corporate core provides technical, educational, and financial inputs, processes, and/or markets the output. In a widening circle of socioeconomic benefits, as small holder productivity increases, work can be offered to landless peasants, and both the farmer and the peasant are brought into the money economy with the overall developmental dynamic this implies.Most effective is a holistic approach involving all segments of the rural community, particularly women.This paper will offer empirical data from case histories in developing countries and will derive from this data (and the extensive exposure of the coauthors to the problems and opportunities of agribusiness worldwide) policy implications for the public sector and strategy implications for the private sector.In planning the transition to sustainable societies, the concept of “triage” is ethically repugnant, politically explosive, and economically devastating. An effective approach to the problem of agriculture would eliminate the current de facto triage, where food/people imbalance leads to the death of hundreds of millions through starvation and malnutrition.