Macroeconomics and Public Finance

Project: Verkehrsinfrastrukturinvestitionen - Wachstumsaspekte im Rahmen einer gestaltenden Finanzpolitik

Project Duration

03/2009 - 02/2010 (finalized)

Commissioned by

Federal Ministry of Finance BMF

Project Team (RWI)

Dr. György Barabas, Tobias Kitlinski, Prof. Dr. Dr. h. c. Christoph M. Schmidt, Prof. Dr. Torsten Schmidt, Dr. Lars-H.R. Siemers (Chief)

Cooperation

Prof. Dr. Werner Brilon (Ruhr-University Bochum)

Summary

The study analyses the effectiveness of public investment in traffic infrastructure, especially focusing on Germany. We provide empirical evidence that investments in public traffic infrastructure significantly increase GDP and economic growth. Referring to employment effects we find only weak empirical evidence. The employment effects seem to be very small. To provide valid evidence on the quantitative effects we can expect from investments in traffic infrastructure, we apply three different methods: (i) VAR models at the national level; (ii) (static and dynamic) panel models at the 16 state levels; and (iii) the RWI business cycle simulation model at the national level. We use data from the German national account from 1970 to 2007 in our time series and simulation models, and data from the budget statistics of the 16 German states (Länder) in our panel models. We also illustrate the traffic bottleneck situation in Germany. Furthermore, in order to discuss the possibility of decoupling economic development and traffic services, we briefly estimate the correlation of traffic services and GDP in Germany. Our major result is that, in Germany, traffic infrastructure investments have been an effective tool of fiscal policy in the past. We find evidence for business cycle (short-term) as well as for growth effects (long-term).

Links

Selected project related publications

RWI Reports

2010

RWI (2010), Verkehrsinfrastrukturinvestitionen – Wachstumsaspekte im Rahmen einer gestaltenden Finanzpolitik – Endbericht. RWI Projektberichte download

RWI (2010), Verkehrsinfrastrukturinvestitionen – Wachstumsaspekte im Rahmen einer gestaltenden Finanzpolitik – Kurzfassung. RWI Projektberichte download

RWI (2010), Traffic Infrastructure Investment – Summary. RWI Projektberichte download

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