The Impact of Public Capital, Human Capital, and Knowledge on Aggregate Output

September 1, 2008

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Frederick L Joutz, and Yasser Abdih. The Impact of Public Capital, Human Capital, and Knowledge on Aggregate Output, (USA: International Monetary Fund, 2008) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates the impact of public capital on private sector output by testing and estimating an aggregate production function for the U.S. economy over the postwar period augmented to include the stock of public capital as an additional factor input. We use patent applications to proxy for knowledge/technology stocks and adjust labor hours for changes in human capital or skill. Using Johansen's (1988 and 1991) multivariate cointegration analysis, we find a positive and significant long run effect of public capital, private capital, skilladjusted labor, and technology/ knowledge on private sector output. We find that public capital accounts for about half of the post-1973 productivity slowdown, but only plays a minor role in the partial recovery of labor productivity growth since the mid 1980s. The largest contribution to that (partial) recovery comes from the knowledge stock and human capital.

Subject: Human capital, Labor, Productivity, Stocks, Vector autoregression

Keywords: Capital stock, Constant returns to scale, Null hypothesis, WP

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/218
Stock No:

WPIEA2008218
ISBN:

9781451870763
ISSN:

1018-5941

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