On the economic effects of public infrastructure investment: A survey of the international evidence

This paper is an up-to-date survey of the literature on the effects of public investment on economic performance and therefore constitutes a comprehensive starting reference for academic researchers and policy makers alike. This is particularly important at a time when widespread recession and public budgetary concerns have brought to the forefront of the policy debate the economic and budgetary effects of public investment. This paper presents a comprehensive discussion of the empirical research on the impact of public investment in infrastructure on economic performance in terms of both the methodological approaches and respective conclusions. It includes an integrated discussion of the methodological developments that successively have led to the estimation of production functions, cost and profit functions and, more recently, vector autoregressive models. It considers applications to both the U.S. and other countries at the national, regional, and industry levels. Finally, it identifies some important areas for future research and highlights the natural convergence of this literature with the macro literature on the effects of fiscal policies.