The Spurious Effect of Public Capital Formation on Private Sector Productivity

The study of public capital formation has undergone fundamental changes due to research undertaken by economists such as Aschauer, Munnell and others. They maintain that public capital formation is augmented by private sector productivity. Aschauer's theories, however, are at variance with the...

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Bibliographic Details
Published in:Policy studies journal 1993-06, Vol.21 (2), p.391-395
Main Author: Tatom, John A.
Format: Article
Language:English
Subjects:
Analysis
Capital
Capital formation
Economic aspects
Economics
Factors
Infrastructure
Macroeconomics
Private Enterprise
Private sector
Productivity
Public investment
Public Policy
Public sector
United States
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Summary:The study of public capital formation has undergone fundamental changes due to research undertaken by economists such as Aschauer, Munnell and others. They maintain that public capital formation is augmented by private sector productivity. Aschauer's theories, however, are at variance with the accepted data on public capital and public sector activities, because he maintains that public capital augments private production directly and indirectly. Macroeconomic studies have shown that capital formation affects the supply side in the economy and endorses Aschauer's theory that capital formation boosts private productivity.
ISSN:0190-292X
1541-0072
DOI:10.1111/j.1541-0072.1993.tb01831.x