Productivity and efficiency in the US: effects of business cycles and public capital

We add to the literature on the US productivity slowdown and effects of public capital on productivity by employing Malmquist productivity indexes to measure productivity. These indexes allow us to decompose productivity growth into efficiency change and technological innovation. We derive these components for each observation, which we exploit to explore factors which may lead to differences in productivity across regions, including business cycles, both own-state and cross-border public infrastructure investment, and relative sizes of the manufacturing, service and public sector. Our results suggest that the components of total factor productivity change lend important insights into the fairly complex effects of public capital on productivity growth.