Estimating Productivity of Public Infrastructure Investment

Department of Economics    2017-06-20

Estimating Productivity of Public Infrastructure Investment

Speaker: Feng Qu,  Associate Professor of Economics,  Nanyang Technological University, Singapore

Host: Zhang Guoxiong, Assistant Professor from Department of Economics, ACEM

Time: Jun 28, 2017, Wednesday, 14:30-16:00

Venue: S203 Xinshangyuan Building


The productivity effect of public infrastructure investment is controversial in the literature using aggregate data, mainly due to reverse causality. To address the identification issue, this paper develops a model of endogenous productivity in a firm-level production function, and matches Chinese firm-level production data with province-level infrastructure investment data. A structural model is employed to further distinguish the long-run productivity effect from the short-run Keynesian demand effect of public investment. The estimated rates of return of public infrastructure investment are 9.2% and 2.5%, respectively before and after controlling for the demand effect. The returns triple once national spillover effects are taken into account. Firm-level evidences are consistent with a mechanism in which public infrastructure investment functions as a catalyst in facilitating resource reallocation from less to more productive firms.

Full paper accessible here:

Speaker Introduction: 

Feng Qu is currently an associate professor of economics at Nanyang Technological University in Singapore. His research areas include econometrics, Chinese economy and productivity analysis. He has published papers in Journal of Econometrics, Journal of Applied Econometrics, China Economic Review, etc.

Welcome to attend!