The Contribution of Infrastructure to Aggregate Output

We use panel data on a cross section of countries to estimate an aggregate production function including infrastructure capital. We find that the productivity of physical and human capital are close to the levels suggested by microeconomic evidence on their private returns, while electricity generating capacity and transportation networks have roughly the same marginal productivity as capital as a whole. However, telephone networks appear to have a higher marginal productivity than other types of capital. We employ panel data cointegration methods in our estimation that take account of the nonstationary nature of the data, are robust to reverse causation, and allow for different levels of productivity and different short-run business cycle and multiplier relationships across countries.