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Revisiting the returns of public infrastructure in Mexico: A limited information local likelihood estimation

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  • Mamatzakis, E.
  • Tsionas, M.

Abstract

This paper revisits the issue of accurately decomposing productivity growth to the impact of public infrastructure at firm level for Mexican industry whether the underlying functional form is a profit or a cost function. Our framework decomposes productivity growth into different components, and in particular the contribution of public infrastructure. We also propose a novel limited information local likelihood (LILL) estimation method that adequately deals with the issue of the endogeneity and model misspecification. The reported evidence shows that public infrastructure enhances productivity growth through profit gains and cost savings in all ten two-digit Mexican industries, though some variability across time exists, notably in the nineties and the 2000s when a shortage of infrastructure is observed.

Suggested Citation

  • Mamatzakis, E. & Tsionas, M., 2018. "Revisiting the returns of public infrastructure in Mexico: A limited information local likelihood estimation," Economic Modelling, Elsevier, vol. 75(C), pages 132-141.
    • Handle: RePEc:eee:ecmode:v:75:y:2018:i:c:p:132-141
    DOI: 10.1016/j.econmod.2018.06.013
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    More about this item

    Keywords

    Productivity growth; Public infrastructure; Limited information maximum likelihood;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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