Private Costs and Public Infrastructure The Mexican Case

38 Pages Posted: 2 Feb 2006

See all articles by Russell D. Murphy

Russell D. Murphy

affiliation not provided to SSRN

Andrew Feltenstein

Georgia State University - Department of Economics

Date Written: October 2001

Abstract

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.

Keywords: Mexico public infrastructure

JEL Classification: H41

Suggested Citation

Murphy, Russell D. and Feltenstein, Andrew, Private Costs and Public Infrastructure The Mexican Case (October 2001). IMF Working Paper No. 01/164, Available at SSRN: https://ssrn.com/abstract=880186

Russell D. Murphy (Contact Author)

affiliation not provided to SSRN

Andrew Feltenstein

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-4130093 (Phone)

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