MEASURING THE CONTRIBUTION OF PUBLIC INFRASTRUCTURE CAPITAL IN SWEDEN

Our purpose is to examine ways of evaluating and measuring the contribution of public infrastructure capital to private sector output and productivity growth in Sweden. We 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, we find that increases in public infrastructure capital, ceteris paribus, reduce private sector costs. We 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 1 988, but that the extent of excess public infractrusture capital has been falling in the 1980s.