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Public Choice

, Volume 113, Issue 3–4, pp 403–424 | Cite as

The Contribution of Local Public Infrastructure to Private Productivity and its Political Economy: Evidence from a Panel of Large German Cities

  • Achim Kemmerling
  • Andreas Stephan
Article

Abstract

This paper proposes a simultaneous-equation approach to theestimation of the contribution of infrastructure accumulationto private production. A political economy model for theallocation of public infrastructure investment grants isformulated. Our empirical findings, using a panel of largeGerman cities for the years 1980,1986, and 1988, suggest thatcities ruled by a council sharing the State (`Bundesland')government's current political affiliation were particularlysuccessful in attracting infrastructure investment grants.With regard to the contribution of infrastructure accumulationto growth, we find that public capital is a significant factorin private production. Moreover, at least for the samplestudied, we find that simultaneity between output and publiccapital is weak; thus, feedback effects from output toinfrastructure are negligible.

Keywords

Political Economy Public Finance Economy Model Empirical Finding Feedback Effect 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Kluwer Academic Publishers 2002

Authors and Affiliations

  • Achim Kemmerling
    • 1
  • Andreas Stephan
    • 2
  1. 1.Department of Political SciencesFreie UniversitätBerlinGermany
  2. 2.Department of Innovation, Industry and ServiceDIW BerlinGermany

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