PUBLIC CAPITAL AND PRIVATE PRODUCTIVITY

This paper uses three different approaches to investigate whether the declining provision of public capital is a major cause of declining la bor productivity. The juxtaposition of approaches removes the variabil ity in estimates due to dissimilar variable definitions and econometri c methodologies. Estimates are based on U.S. time-series data and are evaluated by the implied elasticities of substitution, the prediction of labor productivity trends, and the impact of public capital on prod uctivity. As the three approaches yield very different estimates, it w ill be hard to ever settle the debate about the effect of public capit al on private productivity.