On the Impact of Public Investment On the Performance of U.S. Industries

Pereira, Alfredo Marvão; Andraz, Jorge Miguel

doi:10.1177/1091142102239135

Cited by 48 publications

(41 citation statements)

References 15 publications

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“…Given the analysis of Pereira and Andraz (2013), who revealed a pattern of negative or not significant effects of infrastructure provision at the regional level and positive and significant effects at the aggregate level (Belloc and Vertova, 2006;Pereira and Andraz, 2005), we considered the case of spillover effects of the shinkansen on adjacent or neighboring regions. Earlier empirical evidence, for example, as gathered by Pereira and Andraz (2003) using a vector autoregression approach for transport and communication infrastructure, and Pereira and Roca-Sagales (2007) for highways, demonstrates positive spillover effects of infrastructure provision on neighboring regions. Table 1 gives two subsets of the spillover effects analysis.…”

Section: Methodsmentioning

confidence: 99%

Impact of infrastructure on tax revenue: Case study of high-speed train in Japan

Yoshino

Abidhadjaev²

2017

J Infrastruct Policy Dev

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This study analyzes the impact of a high-speed rail line on tax revenues and on the economy of affected regions within the country. The economic impact of infrastructure investment can be induced by changes in tax revenues when the infrastructure is in operation. Accurate regional GDP data are not necessarily available in many Asian countries. However, tax data can be collected. Therefore, this study uses tax revenue dates in order to estimate spillover effects of infrastructure investment. The Kyushu high-speed rail line was constructed in 1991 and was completed in 2003. In 2004, the rail line started operating from Kagoshima to Kumamoto. The entire line was opened in 2011. We estimated its impact in the Kyushu region of Japan by using the differencein-difference method, and compared the tax revenues of regions along the high-speed railway line with other regions that were not affected by the railway line. Our findings show a positive impact on the region's tax revenue following the connection of the Kyushu rapid train with large cities, such as Osaka and Tokyo. Tax revenue in the region significantly increased during construction in 1991-2003, and dropped after the start of operations in 2004-2010. The rapid train's impact on the neighboring prefectures of Kyushu is positive. However, in 2004However, in -2013, its impact on tax revenue in places farther from the rapid train was observed to be lower. When the Kyushu railway line was connected to the existing high-speed railway line of Sanyo, the situation changed. The study finds statistically significant and economically growing impact on tax revenue after it was completed and connected to other large cities, such as Osaka and Tokyo. Tax revenues in the regions close to the high-speed train is higher than in adjacent regions. The difference-in-difference coefficient methods reveal that corporate tax revenue was lower than personal income tax revenue during construction. However, the difference in corporate tax revenues rose after connectivity with large cities was completed. Public-private partnership (PPP) has been promoted in many Asian countries. However, PPP-infrastructure in India failed in many cases due to the low rate of return from infrastructure investment. This study shows that an increase of tax revenues is significant in the case of the Kyushu rapid train in Japan. If half of the incremental tax revenues were returned to private investors in infrastructure, the rate of return from infrastructure investment would significantly rise for long period of time. It would attract stable and long-term private investors, such as pension funds and insurance funds into infrastructure investment. The last section of the paper will address how incremental tax revenues created by the spillover effects of infrastructure will improve the performance of private investors in infrastructure investment.

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Section: Methodsmentioning

confidence: 99%

Impact of infrastructure on tax revenue: Case study of high-speed train in Japan

Yoshino

Abidhadjaev²

2017

J Infrastruct Policy Dev

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“…Our results explain this hump-shaped structural change and provide a potential driving force for it. 3 Although previous work found that public expenditure was the driving force of structural change (Pereira and Andraz 2003;Dekle and Vandenbroucke 2012), their findings were quantitative, not theoretical. This paper develops a theoretical framework to study how public expenditure yields structural change along with constant growth rates of output.…”

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confidence: 86%

“…Whereas Ngai and Pissarides (2007) and Jensen and Larsen (2004) used different sectoral productivity growth rates to explain the movements 1 Some empirical works have found that public expenditure may be a source of structural change. For example, Pereira and Andraz (2003) used data involving 12 industries covering the US economy for and found that public investment positively affects employment. In particular, one million dollars invested in public capital creates about 27 jobs in the long term.…”

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confidence: 99%

A Multi-sector Model of Public Expenditure and Growth

Zhang

2014

J. Econ.

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A large and rich body of empirical and theoretical research examines the role of public expenditure in fostering economic growth. This paper develops a model of endogenous growth with a particular focus on the role of public expenditure in structural changes. We consider the dynamics of a multi-sector economy that allows for differences among sectors in the output elasticity of public expenditure, and demonstrate that there exists a unique balanced growth path that is locally saddle-path stable. Along the balanced growth path, the endogenous growth of public expenditure and its disproportionate effect on different sectors result in changes in the relative prices of goods, which, in turn, cause structural changes represented by a reallocation of resources across sectors. Quantitatively, the faster the economic growth triggered by the policy, the greater the changes in the reallocation of labor.

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“…Many papers address the uneven influence of public spending in various sectors. In this regard, Pereira and Andraz (2003) empirically test the importance of public spending on private-sector performance in the United States. The effect is heterogeneous across industries and the manufacturing sector is the biggest beneficiary.…”

Section: Preferences and Policy Variablesmentioning

confidence: 99%

Inequality, public good provision and the composition of trade

Dideh

2020

Econ of Transit and Inst Chang

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This paper investigates the effect of trade liberalization on the provision of public goods and shows that inequality also plays a vital role here. Public goods help enhance the productivity of firms, lower prices and raise profitability. The provision of public goods has different effects in closed and open economies. In an open economy, the impact of productive spending on increasing profit is stronger. Consequently, the opening up of the economy shifts the benefits of productive public goods from consumers to firms. As the median voters', share of the firm's profit rises, public goods become more appealing and flourish. Consequently, the manufacturing export is boosted by a rise in productivity. K E Y W O R D S inequality, median voter, productivity, public goods, trade openness J E L C L A S S I F I C A T I O N S D63, H41, O47, F43

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On the Impact of Public Investment On the Performance of U.S. Industries

Cited by 48 publications

References 15 publications

Impact of infrastructure on tax revenue: Case study of high-speed train in Japan

Impact of infrastructure on tax revenue: Case study of high-speed train in Japan

A Multi-sector Model of Public Expenditure and Growth

Inequality, public good provision and the composition of trade

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