policy watch infrastructure investment and economic growth in the late 1980s david aschauer 1989 triggered a long overdue dialogue among economists and political leaders when he published a study arguing that much of the decline in u s productivity that occurred in the 1970s was precipitated by declining rates of public capital investment my own work confirmed these results munnell 1990a spending advocates seized on these findings as support for increased public investment the enthusiasm among policymakers for the early aschauer results was matched if not surpassed by skepticism on the part of many economists critics of these studies charged that the methodology was flawed that the direction of causation between public investment and output growth is unclear and that even if the historical empirical relationships were estimated correctly they provide no clear indications for current policy who s right what do we know and not know about the link between public infrastructure and productivity and what are the implications of these results for policy

the effect of public capital in state level production functions reconsidered using a panel data set for the forty eight contiguous states from 1970 to 1983 several estimates are provided of a cobb douglas production function with three types of public capital as inputs various specification tests are systematically applied to test for both random and fixed state effects nonstationarity endogeneity of the private inputs and measurement error in the preferred specification which is first differences with fixed state effects the public capital variables are not significant while the fixed state effects and private input variables are significant copyright 1996 by mit press

inventories and the concentration of suppliers and customers evidence from the chinese manufacturing sector this study investigates the links between supplier and customer base concentrations and inventory holdings in the chinese manufacturing sector using financial data from a cohort of 516 companies we find that firms that face higher supplier density benefiting from better co ordination with suppliers hold fewer inventories whereas firms with higher customer density retain larger inventories as a result of the bargaining power exercised by customers we then extend the analysis by investigating the impact of account payables receivables and bad debt reserves finding that inventory holdings are positively associated with the two forms of financing and negatively associated with bad debts this last relationship however becomes less severe when firms have access to large volumes of payables finally we show that the above results hold with varying degrees of similarity also when we partition the dataset into six homogenous industrial segments overall this study contributes to the growing literature on inventories and the structure of the supply chain by shedding new light on the importance of both supplier and customer densities as well as the volume of payables and receivables for inventory management

aggregate production functions interregional equilibrium and the measurement of infrastructure productivity abstract recent studies examined the role of public goods in aggregate production functions with a variety of results but the relationship between public goods and aggregate output depends on a complex set of price effects which are absent from aggregate production function analyses these cannot generally uncover the role of public goods in production even costless increases in public goods that are productive for individual firms will not always result in higher equilibrium output further increases in public goods that have zero marginal productivities will increase aggregate output under very plausible conditions a simple example demonstrates the quantitative importance of the results

does infrastructure investment stimulate building supply the case of the english regions ball m and nanda a does infrastructure investment stimulate building supply the case of the english regions regional studies policies to improve infrastructure to stimulate regional growth remain common this paper investigates whether increases in infrastructure investment in the english regions lead to subsequent rises in new commercial and residential property using time series modelling both physical roads and harbours and social infrastructure education and health impacts are investigated hardly any infrastructure effects with respect to commercial property investment were found which raises doubts about whether extra infrastructure creates employment though some impact was related to residential building overall these results raise doubts about the supposed direct effects of infrastructure policies on regional jobs and growth

a double hurdle approach to modelling tobacco consumption in italy this article analyzes the determinants of tobacco expenditures for a sample of italian households a box cox double hurdle model adjusted for heteroscedasticity is estimated to account for separate individual decisions concerning smoking participation and tobacco consumption and to correct for nonnormality in the bivariate distribution of the error terms nested univariate and bivariate models are found to be excessively restrictive supporting the adequacy of a generalized specification estimation results show that consumption decisions are significantly affected by income and demographic characteristics in particular income positively impacts tobacco expenditure while participation probability substantially declines as age increases the existence of significant gender differences in both smoking participation and tobacco consumption patterns is found while high education and white collar occupation reduces the likelihood to smoke and tobacco expenditure levels single adult households have a lower

inventories sales uncertainty and financial strength abstract we investigate the empirical linkages between sales uncertainty and firms inventory investment behavior while controlling for firms financial strength using large panels of manufacturing firms from several european countries we find that higher sales uncertainty leads to larger stocks of inventories we also identify an indirect effect of sales uncertainty on inventory accumulation through the financial strength of firms our results provide evidence that financial strength mitigates the adverse effects of uncertainty

state infrastructure and productive performance recent research on productivity growth has focused on public infrastructure and its impact on economic growth and productivity the authors construct a model of firms technology and behavior taking advantage of the analytical framework provided in the cost function based applied production theory literature and apply it to state level data for u s manufacturing they find that infrastructure investment provides a significant return to manufacturing firms and augments productivity growth the net benefits of infrastructure investment may or may not be positive depending upon the social costs of infrastructure investment and the relative growth rates of output and infrastructure copyright 1996 by american economic association

public budget composition fiscal de centralization and welfare we study the optimal degree of fiscal decentralization in a dynamic federal economy where governments decide on budget size and its allocation between public education and infrastructure spending we find that full centralization of tax and expenditure policies is optimal when infrastructure productivity is similar across regions when differences are not too large partial centralization is optimal with strong differences full decentralization becomes optimal national steady state output tends to be highest under full decentralization we provide a justification for the mixed evidence regarding the oates conjecture by showing that full dominates partial decentralization despite being inferior to complete decentralization on etudie le degre optimal de decentralisation fiscale dans une economie federale dynamique ou les gouvernements decident de la taille du budget et de son allocation entre les depenses en education publique et en infrastructures on decouvre qu une pleine centralisation des taxes et des depenses est optimale quand la productivite des infrastructures est la meme dans toutes les regions quand les differences ne sont pas trop importantes une centralisation partielle est optimale en presence de fortes differences la pleine decentralisation est optimale la production nationale en regime permanent tend aetre la plus elevee quand il y a pleine decentralisation on fournit une justification pour les resultats mixtes obtenus quant a la conjoncture de oates en montrant que la pleine decentralisation est preferable a la decentralisation partielle meme si elle est inferieure a la decentralisation complete

us trade and inventory dynamics we examine the source of the large fall and rebound in us trade in the recent recession while trade fell and rebounded more than expenditures or production of traded goods we find that relative to the magnitude of the downturn these trade fluctuations were in line with those in previous business cycle fluctuations we argue that the high volatility of trade is attributed to more severe inventory management considerations of firms involved in international trade we present empirical evidence for autos as well as at the aggregate level that the adjustment of inventory holdings help explain these fluctuations in trade

new estimates of quality of life in urban areas implicit markets capture compensation for intraurban and interregional differe nces in amenities and yield differences in housing prices and wages these pecuniary differences become preference based weights in a qual ity of life index hedonic equations are estimated using microdata fr om the 1980 census and assembled county based amenity data on climati c environmental and urban conditions ranking of 253 urban counties reveals substantial variation within as well as among the 185 urba n areas the quality of life differences across counties within one s msa is almost one half of the difference between the top and bottom ranked counties in the nation copyright 1988 by american economic association

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

effects of tourism on regional asymmetries empirical evidence for portugal abstract this study uses a vector autoregressive approach to estimate the regional effects of tourism in portugal with the ultimate objective of assessing tourism s role in reducing regional asymmetries we identify the locations where tourism generates higher effects for each region as well as the regions where tourism generates the strongest effects on the country s economic performance this issue is of particular interest from the side of the country s authorities since tourism is a strategic sector to promote national and regional convergence the study s findings suggest that tourism has contributed to the concentration of economic activity in the largest region of the country and to reduce the gap between the second and the third largest regions some regions benefit more from tourism located in other regions than tourism located in each region and tourism in all regions generate positive effects on the country s economic performance

firm inventory behavior and the returns from highway infrastructure investments abstract the debate in public and macro economics over the returns from infrastructure spending has largely ignored transportation economics which has documented substantial inefficiencies created by highway policy and motivated researchers to explain how infrastructure spending produces economic benefits this paper develops a theoretical argument that highway infrastructure investments generate benefits by lowering firms inventories and provides empirical estimates of returns based on this mechanism we find that annual returns from highway investments have fallen to less than 5 percent during the 1980s and 1990s and suggest that a partial explanation may be the rising cost of inefficient transportation infrastructure policy

public sector capital and the productivity puzzle a number of studies have suggested a quantitatively important relationship between public sector capital accumulation and private sector productivity with the most compelling evidence derived from analyses of state level data estimates herein of production functions that use standard techniques to control for unobserved state specific characteristics however reveal essentially no role for public sector capital in affecting private sector productivity only estimates of state production functions that do not include such controls find substantial productivity impacts this result reconciles existing econometric estimates with the findings of hulten and schwab based on growth accounting techniques as such techniques effectively control for state specific effects region level estimates are essentially identical to those from state data suggesting no quantitatively important spillover effects across states copyright 1994 by mit press

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

measuring the contribution of public infrastructure capital in sweden the authors purpose is to examine ways of evaluating and measuring the contribution of public infrastructure capital to private sector output and productivity growth in sweden they do this by specifying and implementing empirically a number of alternative econometric models using annual data for sweden from 1960 to 1988 applying a dual cost function approach they find that increases in public infrastructure capital ceteris paribus reduce private sector costs the authors compute that amount of public infrastructure capital that would rationalize the cost savings incurred by the private business and manufacturing sectors and find that the amount that can be rationalized in this manner is less than what was in fact available in 1988 but that the extent of excess public infrastructure capital has been falling in the 1980s copyright 1992 by the editors of the scandinavian journal of economics

cash flow management and manufacturing firm financial performance a longitudinal perspective abstract a firm s cash flow policies which manage working capital in the form of cash receivables from customers inventory holdings and cash payments to suppliers are inexorably linked to the firm s operations building on earlier research this study i extends prior studies by examining the relationships between changes in cash flow measures and changes in firm financial performance using a longitudinal sample of firm data and ii investigates the direction of the relationship between quarterly changes in cash flow positions and firm financial performance this study is conducted using the generalized estimating equations gee methodology to analyze a longitudinal sample of eight quarters of cash flow and financial performance data from 1233 manufacturing firms the analyses find that changes in the widely used cash conversion cycle ccc metric do not relate to changes in firm performance however changes in the less used operating cash cycle occ metric are found to be significantly associated with changes in tobin s q this examination of how changes in specific cash flow measures relate to changes in tobin s q shows that both reductions in accounts receivables measured as days of sales outstanding dso and reductions in inventory measured as days of inventory outstanding dio relate to firm financial performance improvements that persist for several quarters endogeneity tests of whether a firm s cash flow management strategy leads to changes in firm performance or if the cash flow strategy is a byproduct of firm performance suggest that reductions in dso lead to improved firm financial performance

spillover effects of public capital formation evidence from the spanish regions maybe because of the inconclusive nature of the results on the impact of public capital on output at the regional level the issue of the po ssible existence of the regional spillovers from public capital formation has received little attention the objective of this paper is to provide evidence on the possible existence of such spillovers we consider the case of spain and its seventeen regions our methodological approach consists in estimating an aggregate var model for spain as well as seventeen region specific var models in which both capital installed in the region and capital installed outside the region are allowed to play a role in en hancing regional output the estimation results can be summarized as follows the aggregate effects of public capital formation in spain are important they cannot however be captured in their entirety by the direct effects in each region from public capital installed in the region itself when for each region both the capital installed in the region and the capital installed outside the region are considered the total disaggregated effect from the seventeen regional models are very much in line with the aggregate results furthermore the aggregate effect seems to be due in almost equal parts to the direct and spillover effects of public capital formation ultimately this paper establishes the relevance of both capital installed in each region and s pillover effects in the understanding of the regional decomposition of the aggregate effects of public capital formation in doing so it opens the door to some tantalizing and potentially highly charged research issues in terms of the determination of the optimal location of public investment projects

regional determinants of technical efficiency evidence from the greek economy abstractthis paper emphasizes the role of regional determinants in the technical efficiency of the greek economy we employ a regional production function which is simultaneously estimated with an inefficiency equation the results underline the considerable and growing core periphery disparities in technical efficiency they show the significant efficiency enhancing impact of intra regional market access and its dispersion they also demonstrate that interregional market access specialization sectoral concentration and human capital exert a positive but varying influence on the efficiency of greek regions

public infrastructure investments productivity and welfare in fixed geographic areas abstract measures of the value of public investments are critical inputs into the policy process and aggregate production and cost functions have become the dominant methods of evaluating these benefits this paper examines the limitations of these approaches in light of applied production and spatial equilibrium theories a spatial equilibrium model of an economy with nontraded localized public goods like infrastructure is proposed and a method for identifying the role of public capital in firm production and household preferences is derived empirical evidence from a sample of large us cities suggests that public capital provides significant marginal benefits but the marginal productivity of public capital is low and aggregate city willingness to pay for large increases in public capital is less than their cost the paper concludes with a brief discussion of the political economy of urban infrastructure investment