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Is Public Capital Productive? Evidence from a Meta-analysis

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  • Juan A. Núñez-Serrano
  • Francisco J. Velázquez

Abstract

Debate exists over the role that public investment must play in economic recovery and economic growth. The underlying idea behind this debate has much to do with the value of output elasticity of public capital. This article presents a meta-analysis of this elasticity, which was performed by considering almost 2,000 elasticities previously estimated from 145 papers. In addition, for each elasticity, we also take into account some 30 associated features relative to the methodology used for each case or relative to the characteristics of data samples. The obtained results reveal an average short-term elasticity of 0.13 (0.16 in the long term). We also find evidence of the importance of the methodology adopted for the obtained results, as well as the publication bias. Finally, we find a minor reduction in the value of the elasticity as public capital endowments increase. The results obtained highlight the positive and important effect of public investment on productivity. As a results of the value obtained, public investment will be self-financed in the long-term because of generated returns. But, we also find that the effectiveness of public investment has a clear influence of the institutional context.

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  • Juan A. Núñez-Serrano & Francisco J. Velázquez, 2017. "Is Public Capital Productive? Evidence from a Meta-analysis," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 39(2), pages 313-345.
    • Handle: RePEc:oup:apecpp:v:39:y:2017:i:2:p:313-345.
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    More about this item

    Keywords

    Public capital; infrastructures; economic growth; productivity; meta-analysis; meta-regression analysis; publication bias;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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