Is public capital really productive? A methodological reappraisal

Christophe Hurlin and Alexandru Minea

European Journal of Operational Research, 2013, vol. 228, issue 1, 122-130

Abstract: We present an evaluation of the main empirical approaches used in the literature to estimate the contribution of public capital stock to growth and private factors’ productivity. Based on a simple stochastic general equilibrium model, built as to reproduce the main long-run relations observed in US post-war historical data, we show that the production function approach may not be reliable to estimate this contribution. Our analysis reveals that this approach largely overestimates the public capital elasticity, given the presence of a common stochastic trend shared by all non-stationary inputs.

Keywords: Robustness and sensitivity analysis; Stochastic processes; Time series; Infrastructure; Public capital elasticity; Cointegrated regressors (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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Working Paper: Is public capital really productive? A methodological reappraisal (2013)
Working Paper: Is Public Capital Really Productive? A Methodological Reappraisal (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:228:y:2013:i:1:p:122-130

DOI: 10.1016/j.ejor.2012.12.030

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