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Does the US have an Infrastructure Cost Problem? Evidence from the Interstate Highway System

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  • Matthew Turner
  • Neil Mehrotra
  • Juan Pablo Uribe

Abstract

We pose the problem of managing the interstate as an optimal capital stock problem and define user cost as the charge per vehicle mile travelled that rationalizes observed investments in lane miles and pavement quality. We find that user cost is the sum of the opportunity cost of lane miles, pavement quality, and depreciation. Each depends on the price of lane miles and pavement quality. We estimate these prices and evaluate user cost. Despite large increases in the price of lane miles and pavement quality, user cost declines almost 50% from 1992-2008 due to lower interest rates and higher usage. Increased materials costs largely explain the increasing price of pavement quality, and we reject several common hypotheses for the increase in the price of lane miles.

Suggested Citation

  • Matthew Turner & Neil Mehrotra & Juan Pablo Uribe, 2023. "Does the US have an Infrastructure Cost Problem? Evidence from the Interstate Highway System," NBER Working Papers 30989, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30989
    Note: PE
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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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