@article{Cohen:190898,
      recid = {190898},
      author = {Cohen, Jeffrey P. and Morrison Paul, Catherine J.},
      title = {Public Infrastructure Investments, Costs, and Inter- State  Spatial Spillovers in U.S. Manufacturing: 1982-1996},
      address = {2001-05},
      number = {1570-2016-133700},
      series = {Working Paper},
      pages = {43},
      year = {2001},
      abstract = {The size and significance of public infrastructure  investment impacts on costs and
productivity of private  enterprise, and thus on economic health and growth, has  proven
nebulous to empirically substantiate. Various  studies using alternative theoretical and
econometric  methodologies, and for different time periods, sectors, and  countries, have
tentatively established that such a  productive impact exists and is statistically significant.  It
also seems smaller and more variable over time, space,  and sector than was implied by
initial studies on the  “public capital hypothesis”. One piece of the puzzle that  has received
little attention, however, is the role of  spatial spillovers in driving infrastructure  investment
benefits. Such spillovers are not only  conceptually important, but could also shed light  on
discrepancies between studies for different data, and  particularly aggregation levels. In this
study we apply a  cost-based model to state-level U.S. manufacturing data,  for capital,
production and non-production labor, and  materials inputs, and for the 1982-96 time period,
in an  attempt to untangle the private cost-saving contributions  of inter- and intra-state public
infrastructure investment.  We carry out two kinds of spatial adaptations – a  spatial
autocorrelation adjustment and a spatial spillover  theoretical modification – to the estimating
system  consisting of a Generalized Leontief cost function and  input demand equations, to
address this issue. We find that  intra-state public infrastructure benefits appear larger  in
magnitude when inter-state spillovers are directly  recognized, as well as being invariably
statistically  significant. Inter-state spillovers are also directly  beneficial to manufacturing
firms, although their  contribution appears smaller in size when temporal serial  correlation is
recognized in addition to spatial  correlation.},
      url = {http://ageconsearch.umn.edu/record/190898},
      doi = {https://doi.org/10.22004/ag.econ.190898},
}