Public Investment in Transportation Infrastructure and Economic Performance in Portugal
In this paper, we use a VAR approach to investigate the effects of public investment in transportation infrastructures on private investment, employment, and output in Portugal. Estimation results suggest that public investment crowds in private investment and employment, and has a strong positive effect on output. We estimate that one euro in public investment increases output in the long-term by 9.5 euros, which corresponds to a rate of return of 15.9%. These figures imply that there are strong long-term budgetary benefits from public investment in the form of increased future tax revenues. A closer look at the effects of different types of public investment uncovers the same general patterns. These results are very important from a public policy perspective. They suggest that the strategy followed by the Portuguese authorities of investing in public infrastructures is justified, both from a long-term development perspective and a long-term public budgetary perspective. Copyright Blackwell Publishing Ltd 2005.
Year of publication: |
2005
|
---|---|
Authors: | Pereira, Alfredo M. ; Andraz, Jorge M. |
Published in: |
Review of Development Economics. - Wiley Blackwell. - Vol. 9.2005, 2, p. 177-196
|
Publisher: |
Wiley Blackwell |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Public investment in transportation infrastructures and regional asymmetries in Portugal
Pereira, Alfredo M., (2006)
-
On the effects of highway investment on the regional concentration of economic activity in the USA
Pereira, Alfredo M., (2010)
-
On the economic effects of investment in railroad infrastructures in Portugal
Pereira, Alfredo M., (2010)
- More ...