Public infrastructure investments, productivity and welfare in fixed geographic areas

Abstract

Measures of the value of public investments are critical inputs into the policy process, and aggregate production and cost functions have become the dominant methods of evaluating these benefits. This paper examines the limitations of these approaches in light of applied production and spatial equilibrium theories. A spatial general equilibrium model of an economy with nontraded, localized public goods like infrastructure is proposed, and a method for identifying the role of public capital in firm production and household preferences is derived. Empirical evidence from a sample of large US cities suggests that while public capital provides significant productivity and consumption benefits, an ambitious program of locally funded infrastructure provision would likely generate negative net benefits for these cities.

Location determinants of food manufacturers in the United States, 2000–2004: are nonmetropolitan counties competitive?

“…For example, general expenditures in more remote counties may be higher relative to property tax revenues if noncore counties receive more state or federal funds, and land value assessments are lower. The converse might be expected in locations where land prices are positively correlated with infrastructure provision (Haughwout, 2002). Property tax revenue capacity may be higher due to higher wages, larger populations, and higher service levels, all else equal.…”

Does Income Distribution Affect U.S. State Economic Growth?*

“…Relatively few studies of U.S. regional growth have considered the institutional features stressed in endogenous growth models and instead emphasize more-standard factors such as taxes, regulations, or infrastructure (e.g., Moomaw, Mullen, and Williams, 1995;Fisher, 1997;Gerking and List, 2000;Haughwout, 2002). Partridge's (1997) study of the state incomedistribution/growth relationship over the period is an exception.…”

Network effects of public transport infrastructure: Evidence on Italian regions

“…As a matter of fact, in the absence of co-ordination, the level of investment in public infrastructure may be either too high or too low. As infrastructure investment may alter the distribution of economic activity across regions, certain models emphasize the risk in having an excess of infrastructures in neighbouring competing areas (Haughwout 2002;Romp and de Haan 2005). Moreover, non-co-ordinated decisions could probably produce negative effects (negative externalities) on neighbouring regions.…”