A Multilevel Analysis on the Economic Impact of Public Infrastructure and Corruption in Italian Regions
The IUP Journal of Infrastructure, Vol. IX, No. 1, pp. 17-51, March 2011
Posted: 20 Jun 2011
Date Written: June 20, 2011
Abstract
The paper uses data from the Italian regional public accounts database to investigate and analyze the heterogeneity of the impact of public infrastructure across Italian regions, both on institutional and political grounds. Heterogeneity is addressed by linking the impact of infrastructure on Gross Domestic Product (GDP) with corruption by using a random coefficient panel data model. This paper considers a novel objective measure of corruption that consists of the difference between a measure of the physical quantities of public infrastructure and the cumulative price government pays for public capital stocks. Empirical analysis confirms the existence of parameter heterogeneity across Italian regions and is also consistent with the theoretical considerations that corruption negatively affects economic performance.
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