INFRASTRUCTURE IN A STRUCTURAL MODEL OF ECONOMIC-GROWTH

Researchers, commentators, and politicians have devoted steadily more attention to infrastructure in response to claims that inadequate accu mulation of public capital has contributed to substandard US economic growth. Despite this, the link between infrastructure and productivity growth remains controversial. In this regard, it is somewhat surprisi ng that infrastructure research has developed in isolation from the la rge literature on economic growth. We develop a neoclassical growth mo del that explicitly incorporates infrastructure and is designed to pro vide a tractable framework within which to analyze the empirical impor tance of public capital accumulation to productivity growth. We find l ittle support for claims of a dramatic productivity boost from increas ed infrastructure outlays. In a specification designed to provide an u pper bound for the influence of infrastructure, we estimate that raisi ng the rate of infrastructure investment would have had a negligible i mpact on annual productivity growth between 1971 and 1986.