Public Investment and Economic Growth: A Quantile Regression Approach
Date Issued
2011
Date
2011
Author(s)
Lai, Hui-Shan
Abstract
A recent development in economic growth researches suggests that public capital per se contributes to economic growth; however, empirical studies indicate a relatively wide range of estimations of the effect of public capital in economic growth. Besides, most of these studies have imposed the same marginal effect on all countries or regions by estimating one coefficient for all samples. Using cross-sectional data with 71 countries over the period from 1985 to 2005, this paper investigates the issue of public capital in economic growth by adopting a quantile regression model which is allowed capture regional heterogeneity as well as the different characteristics of economic growth pattern. On the contrary to OLS estimation, this paper finds evidence of parameter heterogeneity in the results. In response to the increase of private capital, countries whose output level and economic growth rate are in the higher quantile have the stronger effect of private capital on economic growth than do countries whose growth rates are in the lower quantiles. The results from quantile regression also indicate that public capital is more productive in those low-quanitile countries than in those high-quantile countries.
Subjects
Growth Empirics
Public Capital
Quantile Regression
Economic Convergence
Parameter Heterogeneity
SDGs
Type
thesis
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