Infrastructure Expenditure Research Articles

Effects of government spending on private investment

This paper investigates the effects of military and non-military public expenditures on gross private investment using cointegration and error-correction analysis. The latter type of public spending is disagreggated into expenditures of infrastructure, consumption and other general government expenditures. The empirical evidence from four emerging European countries namely, Greece, Ireland, Portugal and Spain suggests that in some cases public capital spending stimulates investment, while in others it depresses it. Also, the results tentatively indicate that defence spending exerts no influence on private investment, thus adding to the ongoing controversy of the economic effects of military spending.

Does higher government spending depress private investment?

This paper explores the implications of military and nonmilitary government expenditures on gross private investment. The empirical investigation of the issue is carried out via cointegration and error–correction analyses. The second type of public spending is disaggregated into infrastructure, consumption and other general government expenditures. The evidence from four emerging European countries namely, Greece, Ireland, Portugal and Spain, suggests that in some cases public capital spending complements and stimulates investment, while in others it discourages it. Moreover, the results tentatively indicate that defense spending does not impact private investment, thus contributing to the continuing debate of the economic effects of military spending.

Measuring the Flexibility of Information Technology Infrastructure

Researchers and practitioners alike have taken note of the potential value of an organization's IT infrastructure. IT infrastructure expenditures account for over 58 percent of an organization's IT...

Composition of Government Expenditure, Human Capital Accumulation, and Welfare

This paper uses a dynamic general equilibrium model calibrated to Ugandan data to examine the welfare effects of alternative scenarios of government expenditure and tax financing. Two expenditure types are considered: social spending that affects human capital, and infrastructure expenditures that affect productivity. The paper finds that social expenditures lead to higher economic growth depending on the form of financing; young generations benefit most from social spending financed by consumption taxes; agents do not substitute between human and physical capital as a result of changes in expenditure composition; and improving the productivity of fiscal expenditure is both growth and welfare enhancing.

Composition of Government Expenditure, Human Capital Accumulation, and Welfare

This paper uses a dynamic general equilibrium model calibrated to Ugandan data to examine the welfare effects of alternative scenarios of government expenditure and tax financing. Two expenditure types are considered: social spending that affects human capital, and infrastructure expenditures that affect productivity. The paper finds that social expenditures lead to higher economic growth depending on the form of financing; young generations benefit most from social spending financed by consumption taxes; agents do not substitute between human and physical capital as a result of changes in expenditure composition; and improving the productivity of fiscal expenditure is both growth and welfare enhancing.

The Steady-State Effects of Income Taxation with Endogenous Time Preference

This article studies the steady-state effects of income taxation on output by incorporating endogenous time preference into the neoclassical growth framework. It is found that a rise in the income tax may lead to a boom in economic activities in the long run. This result contrasts with a general conclusion of neoclassical growth models that a surcharge in the income tax will depress output. Furthermore, the scenario that the government transforms the tax revenues into the productive government expenditure is discussed. The authors find that the effect of public infrastructure expenditure on the marginal productivity of private capital may reinforce or diminish the results in the endogenous time preference case.

Government spending, endogenous labor, and capital accumulation

Abstract Following Turnovsky and Fisher (1995) Journal of Economic Dynamics and Control 19, 747–786, we reexamine the dynamic responses of the capital stock to an unanticipated temporary increase in government consumption and infrastructure expenditures. The key factors determining capital accumulation are endogenous labor, the duration of policy expansion, and the relationship between private decisions and the composition of public expenditure. Given that private decisions and public consumption are Edgeworth independent, if employment is variable, investment increases with the duration of fiscal expansion. Following a temporary public infrastructure expansion, there always exists the possibility of a decrease in investment before the fiscal reversion under fixed employment. However, a temporary public infrastructure expansion under variable employment leads to a likely increase in investment before the fiscal reversion.

The combined incidence of taxes and public expenditures in the Philippines

Of central concern to policy makers, the net incidence of fiscal policy is rarely calculated because of the lack of reliable data on the incidence of both taxes and expenditures. This paper calculates the combined incidence of taxes and certain public expenditures in the Philippines, using various short-cuts. We find that the incidence of indirect taxes is broadly neutral, because of general-equilibrium effects. Examining the regional allocation of expenditures and pattern of income distribution, we find that health, education and infrastructure expenditures are progressive. Our conclusion—that the net fiscal incidence in the Philippines is progressive—appears robust to sensitivity analyses.

Assessing the effectiveness of regional development policies in Northern Greece using data envelopment analysis

This paper uses Data Envelopment Analysis (DEA) to assess the comparative effectiveness of public investment in infrastructure and investment incentives to attract private investment in regions of Northern Greece. Investment incentives account for a large proportion of public expenditure in Greece, where one of their declared aims is to make economic development more uniform across the various regions of the country. DEA makes it possible to identify regions where the incentives and infrastructure expenditure attract successfully private investment so that the factors of this success may be analysed in order to improve the Greek government's regional development policy.

Time-Series Properties and Empirical Evidence of Growth and Infrastructure

After more than forty years studying growth, there are two classes of growth models that have emerged: exogenous and endogenous growth models. Since both try to mimic the same set of long-run stylized facts, they are observationally equivalent in some respects. Our goals in this paper are twofold. First, we discuss the time-series properties of growth models in a way that is useful for assessing their fit to the data. Second, we investigate whether these two models successfully conform to post-war U.S. data. We use cointegration techniques to estimate and test long-run capital elasticities, exogeneity tests to investigate the exogeneity status of TFP, and Granger-causality tests to examine temporal precedence of TFP with respect to infrastructure expenditures. The empirical evidence is robust in confirming the existence of a unity long-run capital elasticity. The analysis of TFP reveals that it is not weakly exogenous in the exogenous growth model. Granger-causality test results show unequivocally that there is no evidence that TFP for both models precede infrastructure expenditures not being preceded by it. On the contrary, we find some evidence that infrastructure investment precedes TFP. Our estimated impact of infrastructure on TFP lay roughly in the interval (0.19, 0.27).

INFRASTRUCTURE INVESTMENT AND GROWTH: SOME EMPIRICAL EVIDENCE

This paper explores empirically the relationship between infrastructure and economic growth by including the data of expenditure in infrastructure as a share of GDP in traditional growth cross‐country regressions. Since results are inconclusive, the paper elaborates some new indicators of investment in infrastructure employing physical units of infrastructure. They are positively and significantly correlated with growth in two different samples of countries.

Housing policy outcomes in global perspective: An application of discriminant analysis

Comparative analysis of the functioning of the housing sector has been severely limited by the dearth of reliable data. In seeking to rectify this, the UNCHS and World Bank have provided data on 52 cities through their joint Housing Indicators Program. Drawing on this data set, this paper identifies the housing policy outcomes that are particularly important in distinguishing various groups of cities. This paper also provides a classification of cities on the basis of their respective housing outcomes. The empirical analysis is based on a discriminant analysis. It reveals that infrastructure expenditure per capita is the most important housing policy outcome that discriminates between the various groups of cities. This is followed by floor area per person, housing credit portfolio, percentage of unauthorized housing, and total investment in housing. Furthermore, the analysis indicates that cities which are identical on the basis of their income levels may not necessarily be identical when their housing policy outcomes constitute the criteria for such classification. This is reflected in the fact that 15 of the 52 cities were reclassified on the basis of their housing policy outcomes.

Infrastructure and Evolution in Division of Labor

This paper studies the relationship between infrastructure expenditure and endogenous growth generated by spontaneous evolution of division of labor. It identifies the necessary condition for infrastructure expenditure to take place and its equilibrium time path. Dynamic equilibrium shows that the optimal infrastructure expenditure, the size of the market network, and the level of division of labor increase concurrently. While infrastructure can promote the evolution of division of labor through reducing the unit transaction cost, the total transaction cost each consumer‐producer incurs rises as the optimal share of the infrastructure expenditure increases with economic development.

London and Property Markets: A Long-term View

This paper examines the relationship between investment in built structures, economic growth and economic cycles in the UK from the middle of the 19th century and relates its findings to the development of London. A rising price of built structures relative to investment in equipment has existed throughout virtually all of the time-period. This, it is argued, has encouraged suburbanisation. In addition, a long-term rise in demand for housing is putting additional pressure on living space in the city. London has benefited however from the high level of building investment in modern economies, particularly in attracting key building-intensive activities, like financial services. Long-phases of building activity are shown in the data and they are argued to have a destabilising effect on London's economic growth. These relationships between the relative price of investment goods, long phases of higher and lower activity in their provision and the London economy, reinforce the need for a London-wide planning authority; and, if the social returns of building investment are greater than the private returns, as they probably are, for public infrastructure expenditure and for subsidies for new building investment in the city.

The composition of government expenditure and its consequences for macroeconomic performance∗

Abstract This paper employs the intertemporal optimizing market-clearing framework to compare the effects of government consumption expenditure and government infrastructure expenditure on macroeconomic adjustment and performance. Particular attention is focused on the time path of the capital stock and its adjustment to both permanent and temporary changes in government expenditure are considered. We show how the effects of both forms of government expenditure on economic welfare can be broken down into: 1. (i) a direct crowding-out effect and 2. (ii) a second component which describes the intertemporal tradeoffs between the short-run rate of capital accumulation and the resulting change in the capital stock.

The effect of infrastructure on invention: Innovative capacity and the dynamics of public construction investment

The association between public infrastructural investment and invention is explored in this study, analyzing expenditure and patenting trends and cycles over much of the 20th century. First, innovative capacity, an endogenous indicator of US innovation potential based on invention patent output, is conceptualized and discussed. A major shift in invention modes is shown to have occured over seven decades (1920–1989) as corporate, rather than individual, invention became the most important national source of innovative capacity. The support of public infrastructure for invention is then analyzed, considering its most important characteristics and supportive functions, and its expenditure patterns over seven decades. The analysis of the infrastructural investment and the innovative capacity age cycle dynamics reveals a remarkable association between educational infrastructure construction and both aggregate and corporate innovative capacity. Time-series statistical analyses provide further insights on the effects of infrastructural investment on invention, showing that corporate patenting tends to benefit more from public infrastructural construction and that educational infrastructure expenditures provide a stronger association with both aggregate and corporate inventive performance.

Regional Policy and Investment Behaviour: The Case of Greece, 1971–1982

LOURI H. (1989) Regional policy and investment behaviour: the case of Greece, 1971–1982, Reg. Studies 23, 231–239. The present paper reports an attempt to evaluate the relative effects of regional policy on investment in Greek manufacturing industry during 1971–82. A generalized neoclassical model of investment behaviour is used allowing for separate estimates of the effects of different policy instruments. Both regional investment incentives and infrastructure expenditures were found to exert a significant influence on capital formation. Simulations with alternative policy combinations showed that if incentives were accompanied by more equally distributed infrastructure expenditures the cost of the policy would be the same but its effects would be enhanced: an equal amount of investment would be created with a fairer regional distribution. LOURI H. (1989) La politique régionale et le comportement d'investissement: étude de cas de la Grèce de 1971 à 1982, Reg. Studies 23, 231–239. Cet article fait un compte-rendu d'une tentative d'évaluer les effets relatifs de la politique régionale sur l'investissement dans l'industrie manufacturière grècque de 1971 à 1982. On se sert d'un modèle néo-classique généralisé du comportement d'investissement qui tient compte des estimations indépendantes des effets des divers instruments de politique. Il s'est avéré que les incitations financières et les dépenses d'équipement ont influé sensiblement sur la formation du capital. Des simulations élaborées à partir d'autres combinaisons de politique ont montré que si les incitations étaient assorties de dépenses d'équipement mieux réparties le coût de la politique ne changerait pas mais ses effets seraient accrues: un montant égal d'investissement serait créé, dont une distribution régionale plus équitable. LOURI H. (1989) Regionalpolitik und Investierungsverhalten: dargestellt am Fall Griechenlands im Zeitraum, 1971–1982, Reg. Studies 23, 231–239. Der vorliegende Aufsatz beschreibt einen Versuch, die relativen Auswirkungen der Regionalpolitik auf Investierungen in der Fertigungsindustrie Griechenlands im Zeitraum 1971–1982. Es wird dazu ein verallgemeinertes, neo-klassiches Modell des Investierungsverhaltens angewandt, das gestrennte Schätzungen der Auswirkungen verschiedener Instrumente dieser Politik gestattet. Es stellte sich heraus, dass sowohl regionale Investierungsanreize wie Infrastrukturausgaben einen bedeutsamen Einfluss auf die Kapitalbildung ausüben. Simulationen mit alternativen Kombinationen politischer Verfahren zeigten, dass, sofern Anreize von gleichmässiger verteilten Infrastruktur-ausgaben begleitet wären, die Kosten der Politik die gleichen bleiben, die Auswirkungen jedoch verbessert würden: bei gleichem Investierungsbetrag würde eine gerechtere regionale Verteilung erreicht.

Modelling Manufacturing Imports

It is universally acknowledged that imports in the UK economy have risen very rapidly; import penetration in manufacturing has risen from 26 per cent in 1980 to 34 per cent in 1986. It is felt that any reflationary programme will have little impact on domestic employment since much of the extra spending power will be spent on imports, especially imports of manufactured goods. This has led to the firm belief that a reflationary programme has to be directed towards activities which have a lower import content and hence a higher domestic output and employment multiplier. This was the belief that made infrastructural expenditure such a popular option in the political discussions before the 1987 election.

The Inside Lag in Monetary Policy: A Comment

Previous articleNext article No AccessThe Inside Lag in Monetary Policy: A CommentPatric H. HendershottPatric H. Hendershott Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Journal of Political Economy Volume 74, Number 5Oct., 1966 Article DOIhttps://doi.org/10.1086/259205 Views: 11Total views on this site Citations: 2Citations are reported from Crossref Copyright 1966 The University of ChicagoPDF download Crossref reports the following articles citing this article: Lee,Jai-Min, SangYong Han, Seo Sangbeom Do the Political and Economic Factors Affect Transport Infrastructure Expenditures in Korea?, Journal of Transport Research 16, no.22 (Jun 2009): 131–146.https://doi.org/10.34143/jtr.2009.16.2.131Evsey D. Domar, Jeremy J. Siegel Stability without Planning? The American Experience, (Jan 1971): 47–63.https://doi.org/10.1007/978-1-349-15410-4_4