Private Costs and Public Infrastructure: The Mexican Case
October 1, 2001
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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.
Subject: Communications in revenue administration, Expenditure, Financial institutions, Infrastructure, National accounts, Public investment spending, Revenue administration, Stocks, Transportation
Keywords: Communications in revenue administration, cost reduction, elasticity estimate, Infrastructure, infrastructure stock, Mexico, OLS estimate, private sector cost, public infrastructure, Public investment spending, Stocks, translog cost model, Transportation, WP
Pages:
35
Volume:
2001
DOI:
Issue:
164
Series:
Working Paper No. 2001/164
Stock No:
WPIEA1642001
ISBN:
9781451857993
ISSN:
1018-5941
