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Private Costs and Public Infrastructure: The Mexican Case

Author/Editor: Murphy, Russell D. | Feltenstein, Andrew
Authorized for Distribution: October 1, 2001
Electronic Access: Free Full Text (PDF file size is 894KB)
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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: One objective of government investment is to develop public infrastructure which may reduce private sector costs. In a developing economy, the scope for payoffs to investments of this sort may be particularly large. A major concern related to the recent fiscal adjustment in Mexico is that it has been carried out, in part, by depleting public infrastructure stocks.We estimate the effects of public infrastructure on private sector costs in Mexico and calculate the implied optimal infrastructure stocks. Our estimates indicate that previous results suggesting a large productive role of public infrastructure capital are not robust. There is little evidence that public infrastructure plays a large role in reducing private sector costs.
Series: Working Paper No. 01/164
Subject(s): Private sector | Mexico | Public investment programs | Infrastructure | Economic models
Author's keyword(s): Mexico | public expenditure
    Published:   October 1, 2001        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA1642001   Pages:   35
    Price:   US$15.00
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