Skip to main content
SpringerLink
Log in
Book cover

New Directions in Regional Economic Development pp 197–219Cite as

Infrastructure Productivity with a Long Persistent Effect

  • Chapter
  • First Online:

  • 1146 Accesses

Part of the book series: Advances in Spatial Science ((ADVSPATIAL))

Abstract

Appropriate investment and management of infrastructure is an important issue in national or regional planning. Aschauer (1989) reported two important findings: that infrastructure productivity was significantly higher than expected, and that fewer investments in the USA after 1970 would result in less growth of national productivity. Since then, measurement of infrastructure productivity has become a focal issue in national or regional management policy, and a large number of empirical studies have accumulated; see Sturm (1998). An aggregate production function approach for time-series applied in Aschauer’s study, however, was criticized by economists, or econometricians. Among the assumptions inherent in the production function approach, “constant return to scale” and “competitive input factor market” are often viewed with suspicion from the viewpoint of the endogenous growth theory by Romer (1986) and Lucus (1988) or from an uncompetitive structure of infrastructure market, respectively. Basu and Fernald (1997) empirically tested these assumptions with the production function approach, based on data from 34 sectors of US industries. They concluded that in some segmented sectors of industry, the constant return to scale assumption was violated but that it held true in most sectors. Holtz-Eakin and Lovely (1996) analyzed the effect of infrastructure on economic activities by using a general equilibrium system explicitly considering scale economies. They showed that infrastructure decreases the input factor cost, increases the variety of industries, and increases the number of newly founded companies. Haughwout (2002) applied the spatial equilibrium theory considering regional monopolistic power over input factor market, and measured infrastructure productivity. This study showed that infrastructure provided significant marginal benefit on regional economic activities. Most studies have reported that there is a positive production/cost reduction effect caused by infrastructure, but unfortunately, some studies have paid little attention to the data generation process that significantly influences findings through model specifications. Recent American, European, and Japanese studies about the production function approach have been widely reviewed by Ejiri et al. (2001).

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

References

  • Agiakloglou C, Newbold P (1994) Lagrange multiplier tests for fractional difference. J Time Series Anal 15:253–262

    Article  Google Scholar 

  • Almon S (1965) The distributed lag between capital appropriation and expenditures. Econometrica 33:178–196

    Article  Google Scholar 

  • Aschauer D (1989) Is public expenditure productive? J Monet Econ 23:177–200

    Article  Google Scholar 

  • Baltagi B, Song S, Jung B (2001) The unbalanced nested error component regression model. J Econom 101:357–381

    Article  Google Scholar 

  • Barkoulas T, Baum F, Chakraborty A (2001) Waves and persistence in merger and acquisition activity. Econom Lett 70:237–243

    Article  Google Scholar 

  • Basu S, Fernald J (1997) Returns to scale in U.S. production: estimates and implications. J Polit Econ 105:249–283

    Article  Google Scholar 

  • Beran J (1992) Statistical methods for data with long-range dependence. Stat Sci 7:404–427

    Article  Google Scholar 

  • Bhardwai G, Swanson N (2006) An empirical investigation of the usefulness of ARFIMA models for predicting macroeconomic and financial time series. J Econom 121:539–578

    Article  Google Scholar 

  • Box P, Jenkins M, Reinsel C (1994) Time series analysis: forecasting and control, 3rd edn. Prentice hall, New York

    Google Scholar 

  • Box-Steffensmeier M, Tomlinson R (2000) Fractional integration methods in political science. Elect Stud 19:63–76

    Article  Google Scholar 

  • Cheung Y, Lai K (2001) Long memory and nonlinear mean reversion in Japanese yen-based real exchange rate. J Int Money Finance 20:115–132

    Article  Google Scholar 

  • Chung F, Baillie R (1993) Small sample biases in conditional sum-of-squares estimators of fractionally integrated ARMA process. Empir Econ 18:791–806

    Article  Google Scholar 

  • Davidson J, Sibbertsen P (2005) Generating schemes for long memory processes: regimes, aggregation and nonlinearlity. J Econom 128:253–282

    Article  Google Scholar 

  • Dfrenot G, Guegan D, Peguin-Feissolle A (2005) Long-memory dynamics in a SETAR mode – applications to stock markets. Journal of Financ Mark Inst Money 15:391–406

    Article  Google Scholar 

  • Doi T (2003) http://www.econ.keio.ac.jp/staff/tdoi/index-J.html (in Japanese)

  • Duggal V, Saltzman C, Klein L (1999) Infrastructure and productivity: a nonlinear approach. J Econom 92:47–74

    Article  Google Scholar 

  • Ejiri R, Okumura M, Kobayashi K (2001), Productivity of social capital and economic growth: state of the art. J Infrastruct Plann Manage 688/IV-53:75–87 (in Japanese)

    Google Scholar 

  • Everaert G, Heylen F (2001) Public capital and productivity growth: evidence for Belgium, 1953–1996. Econ Model 18:97–116

    Article  Google Scholar 

  • Godfrey L (1979) Testing the adequacy of a time series model. Biometrica 66:62–72

    Article  Google Scholar 

  • Gonzalo J, Lee T (1998) Pitfalls in testing for long run relationships. J Econom 86:129–154

    Article  Google Scholar 

  • Gourierouex C, Monfort A (1997) Time series and dynamic models. Cambridge University Press, Cambridge

    Google Scholar 

  • Granger CWJ, Joyeux R (1980) An introduction to long-memory time series models and fractional differencing. J Time Series Anal 1:15–29

    Article  Google Scholar 

  • Haughwout A (2002) Public infrastructure investments, productivity and welfare in fixed geographic areas. J Public Econ 83:405–428

    Article  Google Scholar 

  • Henry T, Olekalns N (2002) Does the Australian dollar real exchange rate display mean reversion? J Int Money Finance 21:651–666

    Article  Google Scholar 

  • Holtz-Eakin D, Lovely M (1996) Scale economies, returns to variety, and productivity of public infrastructure. Reg Sci Urban Econ 26:105–123

    Article  Google Scholar 

  • Hosking J (1981) Fractional differencing. Biometrika 68:165–176

    Article  Google Scholar 

  • Hosking J (1996) Asymptotic distributions of the sample mean, auto-covariances, and autocorrelations of long-memory time series. J Econom 73:261–284

    Article  Google Scholar 

  • Igresias P, Jorquera H, Palma W (2006) Data analysis using regression models with missing observations and long-memory: an application study. Comput Stat Data Anal 50:2028–2043

    Google Scholar 

  • Jhun M, Song S, Jung B (2003) BLUP in the nested regression model with serially correlated errors. Comput Stat Data Anal 44:77–88

    Article  Google Scholar 

  • Lucus R (1988) On the mechanics of economic development. J Monet Econ 22:3–42

    Article  Google Scholar 

  • Michelacci C (2004) Cross-sectional heterogeneity and persistence of aggregate fluctuations. J Monet Econ 51:3121–1352

    Article  Google Scholar 

  • Minotani C (1995) Differencing and Integral for economic analysis. Taga-Shuppan, Tokyo

    Google Scholar 

  • Moran P (1948) The interpretation of statistical maps. J R Stat Soc B 10:243–251

    Google Scholar 

  • Munnel H (1992) Policy watch: infrastructure investment and economic growth. J Econ Perspect 6:189–198

    Article  Google Scholar 

  • Patel A, Shoesmith G (2004) Term structure linkages surrounding the Plaza and Louvre accords:evidence from Euro-rates and long-memory components. J Bank Finance 28:2051–2075

    Article  Google Scholar 

  • Robinson P, Hidalgo F (2003) Time-series regression with long-range dependence. In: Robinson PM (ed) Time series with long memory. Oxford University Press, Oxford, pp 305–333

    Google Scholar 

  • Romer M (1986) Increasing returns and long-run growth. J Polit Econ 94:1002–1037

    Article  Google Scholar 

  • Shiller J (1973) A distributed lag estimator derived from smoothness priors. Econometrica 41:775–778

    Article  Google Scholar 

  • Smith J, Taylor N, Yadav S (1997) Comparing the bias and misspecification in ARFIMA models. J Time Series Anal 18:507–527

    Article  Google Scholar 

  • Strum E, de Haan J (1995) Technological change and aggregate production function. Rev Econ Stat 39:312–320

    Google Scholar 

  • Sturm E (1998) Public capital expenditure in OECD countries. The causes and impact of the decline in public capital spending. Edward Elger, Cheltenham

    Google Scholar 

  • Tanaka K (1999) The non-stationary fractional unit root. Econom Theory 15:549–582

    Article  Google Scholar 

  • Tsukai M, Ejiri R, Okumur M, Kobayashi K (2002) Productivity of infrastructure and spillover effects. J Infrastruct Plann Manage 716/IV-57:53–67 (in Japanese)

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Graduate School of Engineering, Hiroshima University, 1-1-1, Noji Higashi, Kusatsu, Shiga, 525-8577, Japan

    Tsukai Makoto

  2. Graduate School of Management, Kyoto University, Yoshida-hommachi, Sakyoku, Kyoto, 606-8501, Japan

    Kobayashi Kiyoshi

Authors
  1. Tsukai Makoto
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Kobayashi Kiyoshi
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Kobayashi Kiyoshi .

Editor information

Editors and Affiliations

  1. Jönköping Int. Business School, Jönköping University, Jönköping, 551 11, Sweden

    Charlie Karlsson

  2. Jönköping Int. Business School, Jönköping University, Jönköping, 551 11, Sweden

    Ake E. Andersson

  3. Dept. Geography & Environment, London School of Economics, Houghton Street, London, WC2A 2AE, United Kingdom

    Paul C. Cheshire

  4. School of Public Policy, George Mason University, University Drive 4400, Fairfax, 22030, U.S.A.

    Roger R. Stough

Rights and permissions

Reprints and permissions

Copyright information

© 2009 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Makoto, T., Kiyoshi, K. (2009). Infrastructure Productivity with a Long Persistent Effect. In: Karlsson, C., Andersson, A., Cheshire, P., Stough, R. (eds) New Directions in Regional Economic Development. Advances in Spatial Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-01017-0_12

Download citation

  • DOI: https://doi.org/10.1007/978-3-642-01017-0_12

  • Published:

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-01016-3

  • Online ISBN: 978-3-642-01017-0

  • eBook Packages: Business and EconomicsEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation