Private Costs and Public Infrastructure: The Mexican Case

By Russell D. Murphy, Andrew Feltenstein

October 1, 2001

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Russell D. Murphy, and Andrew Feltenstein. Private Costs and Public Infrastructure: The Mexican Case, (USA: International Monetary Fund, 2001) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Communications in revenue administration, Expenditure, Financial institutions, Infrastructure, National accounts, Public investment spending, Revenue administration, Stocks, Transportation

Keywords: Communications in revenue administration, Cost reduction, Elasticity estimate, Infrastructure, Infrastructure stock, Mexico, OLS estimate, Private sector cost, Public infrastructure, Public investment spending, Stocks, Translog cost model, Transportation, WP

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/164
Stock No:

WPIEA1642001
ISBN:

9781451857993
ISSN:

1018-5941

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