The New Palgrave Dictionary of Economics

Living Edition
| Editors: Palgrave Macmillan

Public Infrastructure

  • Teresa Garcia-Milà
  • Therese J. McGuire
Living reference work entry


Numerous empirical studies have investigated the contribution of public infrastructure (the stock of publicly provided physical capital) to private economic productivity and growth. Using aggregate time-series data to estimate a production function with private capital, labour and public capital as inputs, the authors found substantial elasticities of private output with respect to public infrastructure. The result did not withstand scrutiny. Studies using disaggregated data (by region and industry), employing econometric diagnostics testing for nonstationarity, fixed effects and endogeneity, and using natural-experiment techniques found public infrastructure’s contribution to economic growth to be minor.


Aggregate production functions Cobb–Douglas functions Cost functions Output elasticity of capital Productivity growth Public infrastructure 
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Copyright information

© The Author(s) 2008

Authors and Affiliations

  • Teresa Garcia-Milà
    • 1
  • Therese J. McGuire
    • 1
  1. 1.