On the long run effect of public capital on aggregate output: Estimation and sensitivity analysis

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


We undertake a sensitivity analysis of the productivity of public capital under the aggregate production function approach. Several proxies are used for the private inputs and for public capital, several dummy variables are included to adjust for energy price shocks, newly revised data is studied, and Stock and Watson’s dynamic OLS estimator is used. Our main results are that the productivity of public capital depends critically on the proxies used, the effects are typically smaller than the early estimates, and omitting the oil price shocks introduces significant upward bias in the measured productivity of public capital.

Key words

Public capital sensitivity analysis DOLS 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2000

Authors and Affiliations

  1. 1.Department of EconomicsWashington State UniversityPullmanUSA

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