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The Spatial Impact of Local Infrastructural Investment in New Zealand

Author

Listed:
  • William Cochrane

    (University of Waikato)

  • Arthur Grimes

    (Motu Economic and Public Policy Research; and University of Waikato)

  • Phillip McCann

    (University of Groningen)

  • Jacques Poot

    (University of Waikato)

Abstract

In this paper we estimate the impact of local authority infrastructure spending in New Zealand using spatial econometric modelling, with the infrastructure spending itself endogenously determined. Utilizing data from the New Zealand Census and Local Authorities Finance data (1991-2008), aggregated to functional labour market areas, we formulate a simultaneous equations growth model of real income, population, land rent and public infrastructure investment. Estimation is conducted using a spatial 3SLS procedure. We find that an increase in local infrastructure spending increases population growth, real income and land values, but is itself endogenous and spatially correlated.

Suggested Citation

  • William Cochrane & Arthur Grimes & Phillip McCann & Jacques Poot, 2010. "The Spatial Impact of Local Infrastructural Investment in New Zealand," Working Papers 10_12, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:10_12
    as

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    File URL: https://motu-www.motu.org.nz/wpapers/10_12.pdf
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    References listed on IDEAS

    as
    1. J. M. Casado-Diaz, 2000. "Local Labour Market Areas in Spain: A Case Study," Regional Studies, Taylor & Francis Journals, vol. 34(9), pages 843-856.
    2. Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
    3. Garcia-Mila, Teresa & McGuire, Therese J., 1992. "The contribution of publicly provided inputs to states' economies," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 229-241, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    local infrastructure; economic growth; migration; land value; spatial spillover;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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