Public capital and productivity growth: evidence for Belgium, 1953-1996

This paper analyses the impact of public capital on multifactor productivity in Belgium making use of single-equation cointegration analysis on annual data for the period 1953-1996. Instead of fitting a deterministic trend to capture the underlying technological progress, patent statistics are used as a proxy. From the estimated long-run equilibrium between public capital and productivity, we estimate an error-correction model to check for the direction of causality. The results support a strong positive relationship with causality running from public capital to productivity. (C) 2001 Elsevier Science B.V. All rights reserved.