Estimates of optimal public capital stocks in Japan using a public investment discount rate framework

Conference paper
Part of the Studies in Empirical Economics book series (STUDEMP)


The purpose of this paper is to empirically assess the optimality of the level of public capital in Japan. We use a methodological approach based on Burgess’s (1988) procedure for calculating the public discount rate. This approach involves estimating a production function, but does not necessarily require utility function estimation. The results indicate that, although the Japanese economy experienced a public capital deficiency over the period 1960-1982, public capital moved toward optimal levels throughout the period.

Key words

Public discount rate optimal public capital Japanese economy 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Aschauer DA (1989) Is public expenditure productive? Journal of Monetary Economics 23:177200Google Scholar
  2. Baltagi BH, Pinnoi N (1995) Public capital stock and state productivity growth: Further evidence from an error components model. Empirical Economics 20:351–359CrossRefGoogle Scholar
  3. Berndt ER, Hansson B (1991) Measuring the contribution of public infrastructure capital in Sweden. NBER Working Paper No. 3842Google Scholar
  4. Burgess DF (1988) Complementarity and the discount rate for public investment. Quarterly Journal of Economics 102:527–541CrossRefGoogle Scholar
  5. Dalamagas B (1995) A Reconsideration of the public sector’s contribution to growth. Empirical Economics 20:385–414CrossRefGoogle Scholar
  6. Databank Bureau of Nihon Keizai Shimbun (1988) Economic analysis of the anti-wealth effect by Nikkei macro-econometric model. A paper presented at the 19th Macro Econometric Model Conference, Osaka, in JapaneseGoogle Scholar
  7. Econometric Committee of Economic Council (1984) Multisectoral econometric model for mid-and long-run analysis. Printing Bureau of Ministry of Finance, in JapaneseGoogle Scholar
  8. Evans P, Karras G (1994) Are government activities productive? Evidence from a panel of U. S. states. Review of Economics and Statistics 76:1–11CrossRefGoogle Scholar
  9. Holtz-Eakin D (1994) Public-sector capital and the productivity puzzle. Review of Economics and Statistics 76:12–21CrossRefGoogle Scholar
  10. Ito T (1992) The Japanese economy. The MIT PressGoogle Scholar
  11. Lau LJ (1978) Applications of profit functions. In: Fuss M, McFadden D (eds.) Production economics: A dual approach to theory and applications, Volume 1, North-Holland, Amsterdam, pp. 133–216Google Scholar
  12. Lynde C, Richmond J (1993) Public capital and total factor productivity. International Economic Review 34:401–414CrossRefGoogle Scholar
  13. Lynde C, Richmond J (1992) The role of public capital in Production. Review of Economics and Statistics 74:37–44CrossRefGoogle Scholar
  14. Nadiri MI, Mamuneas TP (1994) The effects of public infrastructure and R&D capital on the cost structure and performance of U.S. manufacturing industries. Review of Economics and Statistics 76:22–37CrossRefGoogle Scholar
  15. Ogura S, Yohe G (1977) The complementarity of public and private capital and the optimal rate of return to government investment. Quarterly Journal of Economics 91:651–662CrossRefGoogle Scholar
  16. Ornelas FS, Shumway CR, Ozuna T (1994) Using the quadratic Box-Cox flexible functional form selection and unconditional variance computation. Empirical Economics 19:639–645CrossRefGoogle Scholar
  17. Planning Bureau of Economic Planning Agency (1986) Social capital stock in Japan. Gyousei,Tokyo, in JapaneseGoogle Scholar
  18. Sandmo A, Drèze JH (1971) Discount rate for public investment in closed and open economies. Economica 38:395–412CrossRefGoogle Scholar
  19. Shah A (1992) Dynamics of public infrastructure, industrial productivity and profitability. Review of Economics and Statistics 74:28–36CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2000

Authors and Affiliations

  1. 1.School of EconomicsNagoya UniversityNagoyaJapan
  2. 2.Department of EconomicsChukyo UniversityNagoyaJapan
  3. 3.Department of EconomicsHosei UniversityTokyoJapan

Personalised recommendations