Is Infrastructure Capital Productive? A Dynamic Heterogeneous Approach

By C. Calderón, Enrique Moral-Benito, L. Serven. 2011

409 citations recorded by the source corpus.

This paper offers an empirical evaluation of the output contribution of infrastructure. Drawing from a large data set on infrastructure stocks covering 88 countries and spanning the years 1960-2000, and using a panel time-series approach, the paper estimates a long-run aggregate production function relating GDP to human capital, physical capital, and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport, power, and telecommunications. Tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector, which is taken to represent the long-run production function. Estimation of its parameters is performed using the pooled mean group estimator, which allows for unrestricted short-run parameter heterogeneity across countries while imposing the (testable) restriction of long-run parameter homogeneity. The long-run elasticity of output with respect to the synthetic infrastructure index ranges between 0.07 and 0.10. The estimates are highly significant, both statistically and economically, and robust to alternative dynamic specifications and infrastructure measures. There is little evidence of long-run parameter heterogeneity across countries, whether heterogeneity is unconditional, or conditional on their level of development, population size, or infrastructure endowments.

Subfields: Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/7031857f386c128aa6f89974fe167c1eeee64961

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. Santiago Acosta Ormaechea
2. Jia Yoo
3. I. Sanz
4. R. Kneller
5. N. Gemmell
6. C. Berg
7. Yishen Liu
8. Uwe Deichmann

In Political Science and International Relations

1. Santiago Acosta Ormaechea
2. C. Berg
3. Jia Yoo
4. I. Sanz
5. Yishen Liu
6. Uwe Deichmann
7. N. Gemmell
8. R. Kneller

Citations in the corpus

• Does the Composition of Government Expenditure Matter for Long-Run GDP Levels? (2016, positive): “Specifically, following Calderón et al. (2014), we test for weak exogeneity of our vector of fiscal and investment variables, Xi,t, in the following marginal models:”
• Tax Composition and Growth: A Broad Cross-Country Perspective (2012, methodology): “We then divide the whole sample into three groups according to their GDP per capita level (PPP prices): low, middle, and high-income countries.10 Overall, the final dataset comprises 69 countries with at least 20 years of 6 See Annex I for a brief description on how we applied different guidelines t”
• Transport Policies and Development (2015, background): “Calderón, Moral-Benito, and Servén (2015) estimate that the elasticity of output with respect to a synthetic infrastructure index – which includes transport along with electricity and telecommunications – ranges between 0.07 and 0.10.”