The Role of Public Capital in Production

The impact of the stock of public capital on costs of production in the private sector is examined using annual data over the period 1958-1989. A translog cost function is estimated and public capital is found to be a significant input. The estimates indicate that public capital has positive margina...

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Bibliographic Details
Published in:The review of economics and statistics 1992-02, Vol.74 (1), p.37-44
Main Authors: Lynde, Catherine, Richmond, James
Format: Article
Language:English
Subjects:
Capital
Capital goods
Capital stock
Capital stocks
Constant returns to scale
Cost functions
Economic models
Economic theory
Economic value
Economics
Empirical evidence
Error rates
Hypotheses
Infrastructure
Marginal products
Output
Private sector
Production estimates
Productivity
Public capital
Securities
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Summary:The impact of the stock of public capital on costs of production in the private sector is examined using annual data over the period 1958-1989. A translog cost function is estimated and public capital is found to be a significant input. The estimates indicate that public capital has positive marginal product and that private and public capital are complements in production, rather than substitutes.
ISSN:0034-6535
1530-9142
DOI:10.2307/2109540