The Dynamic Effects of Public Capital: VAR Evidence for 22 OECD Countries

Abstract

The issue of whether public capital is productive has received a great deal of recent attention. Yet, empirical analyses of public capital productivity have been limited to a small sample of countries for which official capital stock estimates are available. Building on a new database that provides internationally comparable capital stock estimates, this paper estimates the dynamic effects of public capital using the vector autoregressive (VAR) methodology for a large set of OECD countries. The empirical results suggest that there is evidence for positive output effects of public capital in OECD countries, but hardly any evidence for positive employment effects. Copyright Springer Science + Business Media, Inc. 2005public capital, VAR model, cointegration, OECD countries,

Relative Sources of European Regional Productivity Convergence: A Bootstrap Frontier Approach

“…Since we did not have access to sufficiently long regional investment series, we have built on earlier research in obtaining an initial estimate of the regional capital stock from which we have started to accumulate the depreciated investments (PACI and PUSCEDDU: 2000, MARROCU and PACI: 2000, STEPHAN: 2000, MAS, PEREZ and URIEL: 2000, PRUD'HOMME: 1996. All stocks have been benchmarked to standardized estimates of the national capital stock (KAMPS: 2005(KAMPS: , 2006) in order to avoid any systematic biases in the level of the regional stocks due to differing national assumptions about average service lives or depreciation patterns. Further description of the capital stocks can be found in Appendix.…”

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Are all infrastructure investments created equal? The case of Portugal

“…The initial work was based on a univariate and static production function approach applied at an aggregated level to the U.S. case. The body of empirical literature that developed in its aftermath is extensive [see, for example, Munnell (1992), Gramlich (1994), Kamps (2005), Romp andde Haan (2007, Pereira andAndraz (2013), and Bom and Ligthart (2014), for literature surveys]. The empirical literature focuses on a large variety of issues, for the U.S. and for other countries, both at the aggregate level and at the industry and regional levels.…”

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“…These concerns led to the estimation using Vector Auto Regression (VAR) models including different variables for output, the labor market, private capital and different variables for public investment (see e.g. Lau and Sin (1997), Batina (1998), Pereira (2001), Kamps (2005) or Jong-A-Pin and de Haan (2008)). …”