PUBLIC CAPITAL FORMATION AND PRODUCTIVITY GROWTH - SOME INTERNATIONALEVIDENCE

This paper examines the proposition that public capital spending foste rs productivity growth in the private sector using a pooled sample of seven OECD countries over the 1963-1988 period. The results indicate t hat there is a statistically significant positive relationship between public capital formation and the growth rate of labor productivity. T his result is not sensitive to whether there is constant returns to sc ale to some or all inputs, whether the stochastic formulation of the p ooled model is a fixed- or a random-effect specification, whether the model includes an energy variable, or whether the data are expressed i n the log-differenced or logarithmic form.