Appendix 1: Annotated Bibliography (Page 2 of 3)

Investment and Financing Policies

• Communication and Information Technologies (IVHS/ITS)

• The comparative study of IVHS progress in the United States, Europe, and Japan indicates that all have made great progress in IVHS development, although the focus varied widely from region to region.
• In Japan, the main focus has been on deployment of advanced traffic management systems and the development of automobile navigation systems as a platform for in-vehicle information.
• The European focus has been on exploration and evaluation of numerous alternatives for a wide range of IVHS services with the view that a common architecture would evolve in due course.
• The United States has focused on organization, planning, evaluation, and a top-down systems engineering approach to developing a national IVHS architecture while simultaneously carrying out research and field trials.
• IVHS enjoyed strong public sector support in all three regions.
• In Japan, the installation of advanced traffic management systems has been addressed through a series of five-year government programs for traffic safety facilities.
• Public-sector support of IVHS research and development in Europe has been in the form of centralized planning and coordination as well as by partial funding of research projects by the European Community.
• Institutional issues, albeit of different types, are a universal impediment to IVHS deployment.

Investment and Financing Policies

• Federal and State Funding (innovative financing)

• Since 1994, the U.S. FHWA has been spearheading an initiative, known as TE-045, to introduce new flexibility into the financial characteristics of the Federal-aid highway program.
• Throughout this process, FHWA has emphasized four goals: to increase investment, to accelerate projects, to improve the utility of existing financing opportunities, and to lay the groundwork for long-term program changes.
• Eight major types of financing tools have been proposed and tested under TE-045. They can be generally characterized as investment tools or cash flow tools.
• The two final objectives of the TE-045 initiative centered on (1) facilitating use of financing tools introduced under ISTEA, and (2) building a base of experience from which to develop future legislation to improve the financial characteristics of the Federal-aid highway program.

Results and Findings

• Fees and charges. There is greater than anticipated willingness to levy local fees and tolls to provide the funding necessary to accelerate project construction.
• Credit support. States respected the FHWA ground rules of no "new money" for the first phase of the initiative. A great interest was expressed in various Federal "credit support" concepts, such as lines of credit, and project-specific loans.
• Policy changes. There is demonstrated need to modernize and standardize obligation and outlay rules to smooth the role of Federal money in the construction stage of the projects.

Investment and Financing Policies

• Economic analysis.

• A project is termed efficient if the present value of its benefits exceeds the present value of its costs.
• A state can promote economic development by undertaking highway investments if and only if they are efficient.
• Economic development is not "job creation". Employment can be increased by policies that reduce real income.
• Policies that simply shift economic activity from one location to another do not promote overall economic development.
• A road project promotes development only if it produces transportation cost savings that exceed the project's costs. There is no separate "economic development" justification for highway investment.
• When a road project is evaluated as a mean of attracting a particular business to a certain location, this investment is justified only if it is the least costly one.
• When assessing the benefits of road projects, it is necessary to take into account that building a particular stretch of road may reduce the benefits derived from existing roads.
• Road investment is a poor tool for redistributing income, wealth or prosperity. Direct transfers of income better achieve this aim.
• Highway investments that would benefit a small number of persons are unlikely to foster economic development.
• A highway investment that seeks to spread development to declining areas cannot maximize it as a whole.
• Investing in roads to attract foot-loose industries is generally unwise because this investment is fixed.

Investment and Financing Policies

• Economic analysis

• This paper explores the correlation between public capital, focusing on roads as its largest element, and macroeconomic productivity.
• The author investigates econometrically how changes in roads affect the relative productivity performance of U.S. industries from 1953 to 1989.
• The basic stylized fact is that changes in road growth are associated with larger changes in productivity growth in industries that are more vehicle intensive. Thus, the data strongly supports the notion that industries with a lot of vehicles benefited disproportionately from road building.
• This finding suggests that the correlation between aggregate productivity and infrastructure reflects causation from changes in the road stock to changes in productivity.
• Construction of the interstate highway system peaked in the late 1950's and was largely completed by 1973. The results indicate that this construction boom substantially boosted productivity. In particular, the estimates imply that public investments had above-average rates of return, and contributed about 1 percent point more to total factor productivity growth before 1973 than after.
• A conclusion is made that roads were exceptionally productive before 1973 but are not exceptionally productive at the margin thereafter.
• Finally, the empirical importance of congestion is explored. Congestion does not appear empirically important before 1973 but becomes important thereafter.

Regulation and Institutional Environment

• Industry structure and competitiveness

• This paper focuses on the direct impact of deregulation on transportation industry costs, prices, and service.
• Deregulation allowed entry into transportation markets both by new entrants and by incumbent firms.
• Competition in less-than-truckload (LTL) trucking has intensified since deregulation, despite the decline in the number of carriers, both because of the growth of low cost regional LTL carriers and because of increased competition from alternative shipment carriers.
• Innovations. Railroad and trucking firms have tailored their services to shippers' production and inventory policies thus achieving cost savings for shippers.
• Improvements in network design and greater use of intermodal operations have enabled trucks and railroads to provide faster and more reliable service. Transportation firms have become more efficient by using information systems to track shipments and route their cargo.
• By stimulating competition and by giving carriers greater operating freedoms and incentives to become more innovative, deregulation has lead to substantial improvements in the efficiency of intercity transportation.
• Shippers have benefited substantially from the decline in truck rates, which have paralleled the decline in costs. Shippers have also gained from improvements in service time and service time reliability. Including these benefits, the annual net benefits to shippers from trucking deregulation is estimated to be more than $18 billion (1996 dollars).

Regulation and Institutional Environment

• Industry structure and competitiveness

• The purpose of this study is to construct and substantiate a relationship between two economic forces, deregulation and innovation, believed to be at the center of the railroad renaissance.
• The nature of economic, institutional, and managerial problems facing railroads before passage of the Staggers Act is examined in detail. The discussion establishes that the forces causing the decline of railroads were numerous, persistent, and cumulative in their effect.
• Moving on to innovation, the study summarizes Edwin Mansfield's path-breaking work on the economic factors affecting technology development and deployment historically.
• Turning to the period after relaxation of regulation in 1980, the study relates in detail numerous ways in which deregulation has fostered railroad innovation and change.
• An intriguing picture emerges as the study concludes. During its nearly two-hundred-year history, railroad technology has demonstrably progressed in surges. These stages of rapid transformation were characterized by exploration of widely held, paradigm shifting, vision for the future, after which progress settled back into what is now called "continuous improvement."
• It is concluded that future railroad service improvements will be based on optimized network capacity management techniques, faster transit times, and reduction of quality failures.

Regulation and Institutional Environment

• Industry structure and competitiveness
• Command-and-control measures (safety standards)

• Trucking accounts for about three-quarters of total commercial carrier fatalities, followed by railroads, which account for about a fifth.
• Fatal truck crushes per vehicle mile have declined by more than half in the past twenty years.
• Transportation safety is valued by customers but costly to provide. This study explores several questions: how much safety should be provided; to what extent can the free market ensure safety; what kinds of government policies are needed to deal with the market failures.
• Economists cannot currently determine whether there is "too much" or "too little" safety.
• Several reason are advanced as candidates for explaining market failure in transportation safety: imperfect information; carrier myopia; customer rationality; existence of externalities; and bilateral crashes.
• Many of these market failures have been recognized for more than a century. Longstanding legal arrangements have developed to respond to three of them: imperfect information, externalities, and bilateral crashes.
• Government intervention should be deployed as a complement to existing legal processes. This intervention can take the form of insurance requirements, provision of safety information, and direct safety regulation.
• Problems with traditional methods of regulation have given rise to a new regulatory strategy known as performance standards.

Regulation and Institutional Environment:

• Command-and-control measures.

• While previous studies have indicated that increases in truck size and weight limits could improve motor carrier productivity, this study addresses the question of whether or not freight shippers will also benefit.
• This research was undertaken to determine the net effect of truck size and weight policy changes on shipper total logistics cost and how these effects might influence the demand for alternative tractor-trailer configurations.
• The data on product characteristics, lane volumes, transportation cost, and other logistics costs, gathered in the shipper survey, were entered into a computer program called the Freight Transportation Analyzer (FTA). The FTA implements a deterministic economic order quantity model adapted to incorporate transportation costs.
• A major finding of the study is that, in most cases, use of longer combination vehicles (LCVs) would have a significant favorable impact on the annual total logistics cost of truckload shippers. Savings in annual total logistics cost are as high as 59 percent for turnpike doubles.
• The research indicates that, when single trailer freight costs are two or more times greater than the inventory carrying costs, switching from single trailers to LCVs will greatly reduce the shipper's annual total logistics cost.
• The study shows that turnpike doubles operating under higher than existing regulatory limits could reduce shippers' annual total logistics cost enough to induce some shippers to switch from rail boxcars and intermodal to LCVs.

Investment and Financing Policies

• This report develops a series of case studies of how individual firms or specific industries have used transportation as a catalyst to improve their productivity.
• This study goes beyond the role traditionally attributed to transportation, that is, the potential for direct savings in terms of vehicle operating costs or reduced travel time. Instead, the focus is how firms react to transportation in terms of their business operations.
• Companies from different industries were identified, according to several transportation related productivity changes, and interviewed to develop case studies.
• The case studies showed a cascade of benefits stemming from transportation improvements. The effects may be measured in terms of reduced unit cost and better quality. Ultimately these effects make it possible to achieve a higher return to either capital or labor.
• The lesson is that industries benefit from improved flexibility and the elimination of bottlenecks.
• An important force in productivity savings is often savings in direct labor requirements.
• There is a clear, and growing interaction between high technology and transportation.
• There is a chain-reaction type of effect linking effective transportation to a series of productivity gains.
• One policy implication is the need for investment in a coordinated network, because a series of independent small investment are unlikely to achieve the same effect on industry productivity as large-scale investment.
• There appears to be a linkage between productivity gains and the intelligent vehicle-highway systems.

Regulation and Institutional Environment

• Command-and-control measures

• This study considers the impacts that would result from providing "reserved capacity" for trucks rather than restricting trucks.
• Reserved-capacity strategies for trucks would offer (1) nearly $10 million in annual travel time savings for the trucking industry; (2) a savings of about 2.5 minutes per average truck trip; and (3) almost $30 million in annual travel time savings for single-occupancy vehicles.
• The difference in travel time between the reserved-capacity strategy that would add trucks to the existing HOV lanes and the one that would add exclusive truck lane would be insignificant, providing little justification for an exclusive truck lane.
• The expected impact of reserved-capacity strategies on safety would be small, depending on the particular reserved capacity strategies.
• Reserved capacity strategies for trucks would accelerate pavement deterioration in the reserved lanes, but the reduction in the pavement deterioration rates of the general purpose lanes might counterbalance future construction costs.
• Surveys of the general public showed considerable resistance to reserved-capacity strategies for truck. However, this resistance is similar to that encountered when HOV lanes were first introduced.
• The study recommends that the idea of reserved-capacity strategies for trucks continue to be presented to the trucking industry, to the public, and to other impacted parties for discussion and consideration.

Investment and Financing Policy

• Federal and State Funding;
• Communication and Information Technologies.

• This research addresses the impact of technological change in a regional rail network and a regional highway system on regional productivity and development.
• The area selected for the investigation was the Houston- Beaumont region of Texas.
• In the highway system, the most significant and far-reaching change had been brought about by the introduction of the limited access urban freeway. The key result of this change was enormous increase in road capacity, which, in turn, made possible the moving of big volume of traffic into and out of relatively small, well-defined high intensity retail and office centers.
• With respect to rail, automation of signalization, coupled with sophisticated containerizing, represented the major technological changes – all resulting in reduced shipping time.
• The main finding of this investigation is that technological changes in transportation systems as such have very little measurable impact on the overall economy of a given region.
• In the case of rail systems technology, the factors considered in this study would suggest that time loss, and therefore, cost penalties would have resulted from failure not to bring the system up to the state-of-the-art.
• In the case of the highway network, introduction of the limited access highway had substantial consequences on the urban form, especially on certain sectors and corridors.

Regulation and Institutional Environment

• Command-and-control measures

• This report focuses on the economic impacts of the longer combination vehicles (LCV), including (1) the impacts on infrastructure that might result from expanded LCV operations and (2) the potential benefits from their use.
• Nationwide use of LCVs on the interstate highway system could require additional investments of $2.1 billion to $3.5 billion to replace bridges, improve interchanges, and provide staging areas for breakdown and assembly of LCVs. Much of the projected costs would be incurred in the more densely populated areas of the country.
• An analysis for the trucking industry projected that nationwide use of LCVs would reduce annual trucking costs by about 3 percent ($3.4 billion). These annually recurring benefits would exceed the one-time infrastructure investment costs. However, expansion of the routes open to LCVs would benefit some sectors of the trucking industry more than the others.
• The limited data available on the safety record of LCVs show that they have not been a safety problem on the western highways and eastern turnpikes where they currently operate. However, some operational characteristics of LCVs are identified that could make them a greater safety risk than single-trailer combinations.
• Most states that allow LCVs do little to monitor their operations, regulate drivers' qualifications, or inspect the vehicles. Report concludes, considering these factors, that any expansion of LCV routes should be subject to careful analysis.

Regulation and Institutional Environment

• Command-and-control measures

• This study summarizes the results of a comprehensive study of a new approach to truck size and weight regulation, known as the Turner Proposal.
• The Turner Proposal envisions new truck configurations that would reduce road wear caused by truck traffic and increase freight transportation productivity.
• Truck users would gain productivity by operating trucks that exceed 80,000 lb. Pavement wear would be decreased by spreading each truck's weight over more axles, reducing the maximum load on each axle below limits.
• Savings to carriers or shippers, switching from other trucks to Turner trucks, would average 12 percent of line-haul operating costs. Aggregate freight cost savings would be $2 billion a year (1.4 percent of the cost of truck freight shipping) at 1988 prices and freight volumes.
• The safety impact of adopting Turner trucks would be a small decline in truck accidents and small reduction in truck interference with traffic flow, because total annual miles of combination-truck travel would decline compared with the travel that would occur without Turner trucks.
• The annualized cost to replace all interstate bridges and one-fourth of all bridges on other systems that are deficient to carry Turner trucks would be $403 million, or about 10 percent increase in bridge capital expenditures.
• Nationally, Turner trucks would reduce by $326 million the annual highway agency costs to maintain the road system in the existing condition.
• The use of Turner trucks on U.S. roads would constitute a net benefit to the country.

Regulation and Institutional Environment

• Command-and-control measures

• Conventional efforts to improve trucking productivity have typically focused on the separate components of the system: vehicle, road, or operating protocols. Building on the body of knowledge on system evolution and maturity, this dissertation shifts the focus of analysis from the component level to the system level.
• New combinations of trucks, roads, and operations that could achieve sizable productivity gains if introduced into the truck-highway system are explored.
• Guidelines for selecting new combination and identifying market niches where new technological formats could establish footholds are presented.
• A simulation model to assess the benefits expected from new truck and road combinations is developed.
• Grain transportation in rural areas is chosen as a possible market niche. The results of the case study analysis indicate that trucks of up to 200,000 lb. gross vehicle weight operating on a network of low maintenance roads can offer services four to six times cheaper than the costs of present day grain shipping.
• A conclusion is made that the major hurdle for introducing the proposed truck-highway combination is institutional and not technological.
• While implementing all changes at the same time might present a problem, the study describes a possible scenario so that these changes are taken one step at a time.

Investment and Financing Policies

• Economic analysis;
• Federal and State funding.

• This study represents an extension of previous work, which is intended to avoid the pitfalls and limitations of partial equilibrium cost-benefit analysis.
• The empirical results of this study provide substantiating evidence that there is positive relationship between general transportation spending and long run economic performance.
• It is found that an increase in transportation spending of $10 billion for ten years lifts the labor productivity by over $1, 300 after 20 years. This represents a rise in labor productivity of nearly 4 percent over the level, which would occur in the absence of higher transportation funding.
• The benefits of higher transportation spending turn out to be sufficient to outweigh the cost of such a program. The benefit to cost ratio for general transportation spending exceeds unity some eleven years after transportation spending is reduced to its former level.
• The evidence suggests that public transit spending carries over twice the potential to impact productivity, as does highway capital.
• There are valid reasons (theoretical, econometric, etc.), however, for exercising caution in use of these results for policy purposes.

Investment and Financing Policies:

• Economic analysis;
• Federal and State funding.

• This study is carried out to explore the relationship between federal assistance and productivity of transit services. More particularly, the study is designed to test a hypothesis being offered by transit critics suggesting that the presence of federal assistance has actually caused declines in performance and productivity of public transit.
• The results of this study suggest that just the reverse may be true. First, transit productivity has increased and performance has improved after the enactment of the National Urban Mass Transportation Act of 1974. Secondly, these improvements came about at a time coincident with the initiation and increase in federal assistance to transit operations. Finally, the presence and growth in federal operating assistance has been a major factor in prompting increased commitments from state and local government.
• The analysis is carried out in a three-step process. First, the concept of productivity measurement and specific measures most appropriate for transit policy analysis are reviewed. Second, disaggregated data from a representative sample of 44 individual transit system is assembled. Third, changes in various measures of productivity and performance are calculated for the 1970- 75 and 1975-1980 periods.

Investment and Financing Policies:

• Economic analysis;
• Federal and State funding.

• This report investigates the contribution of publicly owned highways and streets to manufacturing productivity.
• A short-run cost structure with two quasi-fixed factors (private capital and highway and street capital) is specified and estimated. Data from the U.S. manufacturing industry in the 48 contingent states over the period of 1970-1986 are used in the study.
• The main result clearly demonstrates that highway and street capital provides positive marginal benefits to firms in the manufacturing industry. That is, an increase in public capital reduces manufacturing costs and improves productivity. However, the contribution of private capital is greater than that of public capital.
• A conventional benefit-cost analysis of a specific transportation project should take into account this potential productivity benefit.
• The long-run equilibrium levels of private and public capital are not attained. The recent productivity slowdown may be partially explained by utilizing sub-optimal levels of capital, both private and public.
• The economy-wide marginal benefits of public infrastructure are likely to be larger than reported in this study because it does not incorporate any other benefits than of manufacturers.

Investment and Financing Policies:

• Economic analysis;
• Federal and State funding.

• The Kansas Comprehensive Highway Program (CHP) was an eight-year program of highway construction ending June 1997. Overall funding totaled $4 billion.
• This study measures the economic impact of the $2.86 billion used for construction of K jurisdiction projects. These are typically those projects on the state highway system outside of cities except for interstate roads, which are classified as K jurisdiction projects regardless of location.
• The objectives of the study are: 1) Measure the direct output, income, and employment impacts by highway improvements type of CHP. 2) Measure indirect and induced output, income, and employment impacts by highway improvement type of the CHP. The output impact is the increase in Kansas production as a result of the CHP. The income impact is the increase in Kansas wages and salaries in response to an increase in the income of the workers employed on CHP construction projects.
• The economic impact of the CHP highway construction contracts as measured by output is $7.4 billion. The economic impact of the CHP contracts as measured by income is $1.4 billion. The economic impact of the same construction contracts as measured by employment is 117,820 full time equivalent jobs.
• Highway investment yields many other benefits to highway users that are beyond the scope of this project.

Investment and Financing Policies:

• Economic analysis;
• Federal and State funding.

• This study attempts to replicate the analyses of Aschauer, Munnell and others regarding the impacts of public infrastructure investment on private factor productivity on state level.
• The data set provided by the NCHRP study 2-17 (3) "Macroeconomic Analysis of the Linkages Between Transportation Investment and Economic Performance" is used to analyze the relationships between highway capital and Gross State Product and private factor productivity for Texas.
• The relationships generated from this data set for Texas are not statistically significant.
• There are two main reasons for failure to achieve statistically significant results. The first reason appears to be a lack of sufficient observations due to the short length of time covered by data set. It is combined with the absence of adequate ways to control for significant Texas-specific business cycle volatility during the period covered by this data set.

Investment and Financing Policies:

• Economic analysis (recent research)

• Recent research by Aschauer, Munnell and others has uncovered an apparent relationship between rates of productivity growth and investment in core infrastructure by the public sector.
• If valid these findings account for most of the widely reported slowdown in U.S. rates of productivity growth in recent decades, and lend a measure of intrinsic worth to government intervention in the national economy more fundamental than merely Keynesian countercyclical role.

This review:

• outlines the central results of the dozens of research efforts mounted in the last decade that attempt to explain the U.S. productivity slowdown;
• retraces the findings of the researchers most noted for their linking of infrastructure investment with productivity changes;
• recapitulates the criticisms to which they have been subjected recently, and;
• summarizes the main issues that divide protagonists and antagonists in this area.
• Finally, a set of empirical and theoretical issues is introduced that have not been given adequate attention by researchers on either side of the debate.

Investment and Financing Policies:

• Communication and Information Technologies (Intelligent Transportation Systems).

• This study focuses on road and vehicular infrastructures and the roles that Intelligent Transportation Systems (ITS) technology can play in solving the major current and anticipated future societal problems of traffic congestion and delays as well as travel safety. Special attention is given to environmental and economic concerns related to these problems.

This book:

• considers Intelligent Transportation Systems and services they provide;
• accounts for potential ITS benefits resulting from reduced traffic congestion, safety and environmental improvements, and increased driver convenience;
• states some technical, legal, economic and social obstacles and issues to the deployment of ITS;
• outlines the need for cooperation between the public and private sector in ITS deployment, and;
• presents some international perspectives and policies analyses for the biggest players on the ITS field: United States, Europe and Japan. Also some representative ITS implementations are given.

Investment and Financing Policies:

• Economic analysis.

• This brochure summarizes the results of a study by M. Ishad Nadiri and Theofanis Mamuneas which estimates industry productivity benefits resulting from the highway network.
• This research clearly documents the highway network's contribution to industry productivity growth, national economic performance, and international competitiveness.

Key findings include the following:

• Over the period 1950 to 1989, U.S. industries realized production cost savings averaging 18 cents annually for each dollar invested in the road system. Investment in non-local roads yield even higher production cost savings, estimated at 24 cents for each dollar of investment.
• The highway network's contribution to economic productivity growth was quite large during and immediately following the interstate construction era. Although the impact has declined considerably since the 1970's, highway investment remains an important contributor to economic productivity growth.
• The net social rate of return on investment in the non-local system during the 1980's was 16 percent, and the rate of return for the entire road network was 10 percent. This high return to highway capital is due to its network feature, i.e., its benefits are shared by all industries.

Regulation and Institutional Environment:

• Industry structure and competitiveness;
• Command-and-control measures.

• A historic perspective is taken by analyzing the Motor Carrier Act of 1935 and the trucking regulation from 1935 to 1980.
• The market structure (concentration, condition of entry and product differentiation) and economic performance of the freight industry are analyzed. A conclusion is made that highway freight transport is inherently a market structure of low concentration, ease of entry, and variation in service quality limited to customers' preferences. The conduct of trucking firms can be expected to be both non-collusive and non-predatory.
• Social benefit of regulation of the freight industry, estimated to $59 million in inventory savings, can not counterbalance to a $5.3 billion additional social cost attributable to the continuation of economic regulation.
• The theoretical argument that freedom from geographic and commodity restrictions will enhance intertemporal utilization of truck capacity is supported both by experience in unregulated markets and by the simulation model presented in the book.
• Rural impacts of economic regulation and resulting internal subsidization are discussed.
• Next, economic consequences and potential for relaxation of entry controls are considered.
• Finally, an qualitative and quantitative assessment of the Motor Carrier Act of 1980 is made. It is concluded that in the absence of industry support for some continued regulation, it is unlikely that it would long survive.

Regulation and Institutional Environment:

• Industry structure and competitiveness;
• Command-and-control measures.

• The nation's surface freight transportation was deregulated to solve two distinct problems: excessive rates in trucking industry, and insufficient returns on investment in the rail industry.
• Deregulation appears to have changed both carrier and shipper behavior. Carriers have taken significant steps to improve the efficiency of their operations and to set rates that are more responsive to market conditions. Shippers have begun to coordinate their production activity more effectively with their transportation services.
• Shippers' annual benefit from surface freight deregulation amounts to some $20 billion (1988 dollars). Railroads' and TL carriers' annual profit gains total $2.9 billion and $0.88 billion, respectively. Annual LTL carrier profit losses are estimated to be $5.3 billion, and the annual losses to railroad and LTL labor are roughly $3 billion, which yield an annual net welfare gain of almost $16 billion (1988 dollars).
• Although deregulation has made substantial progress in improving efficiency in freight transportation, shippers could gain an additional $5.6 billion (1977 dollars) if rail rates were forced, through competition, to marginal cost. These gains, however, would be at the expense of railroad profits.
• Because rail shippers' welfare and railroad profitability can improve, policymakers should continue to promote efficiency and competition among carriers.

Investment and Financing Policies:

• Economic analysis.

• This paper presents an analysis of an important component of the benefits of Federal-aid highway infrastructure investments in the United States. Specifically, it focuses on the effects of those investments since 1950 on costs and productivity of firms in the U.S. road freight transport industry.
• A theoretical and statistical model, based on a translog function, is employed to estimate the truck firm costs. A panel containing regionally aggregated data for all Class I motor carriers reporting to the Interstate Commerce Commission (ICC) is used to run this model.
• The outcome of the model documents that the rapid growth of highway infrastructure, which occurred between 1950 and 1973, had a strong and positive effect on productivity in trucking.
• The results indicate the benefits of highway investments to be substantial – large enough to justify between one-third and one-half of the cost of the Federal-aid highway system over this period on the basis of the benefits to trucking alone.
• Another interesting result is that after 1970 it appears that the marginal benefits of additional highway investments were very near zero.
• The other benefits of the U.S. highway infrastructure system need to be estimated, including the benefits to passenger transportation and the benefits to improved freight service.

Investment and Financing Policies:

• Economic analysis.

• This paper considers the relationship between the aggregate productivity in the private sector and the public sector stock and flow variables.
• The model is a logarithmic version of a generalized Cobb- Douglas production function.
• The empirical analysis focuses on the period 1949 to 1985 and utilizes annual data.

The empirical results indicate that:

• the non-military public capital stock is dramatically more important in determining productivity than either the flow of non-military or military spending;
• military capital bears little reason to productivity, and;
• a "core" infrastructure of streets, highways, airports, mass transit, sewers, water systems, etc. has most explanatory power to productivity.
• The paper also suggests an important role for the net public capital stock in the "productivity slowdown" of the last decades.
• In future research, it would be useful to extend the analysis to permit a cross-country comparison of public investment and productivity gains.

Investment and Financing Policies:

• Economic analysis.

• This article develops an estimation procedure in order to establish the direction of causation from the level of highway capacity to the growth rate of per capita output across localities.
• The model assumes transportation services to be produced by a simple neoclassical technology.
• The logic of the approach is quite simple. An increase in the stock of highways for a given locale generates a higher return to local, productive activity by raising the level of transportation services available to producers. This, in turn, stimulates private investment in these productive facilities. The increased investment carries with it higher growth in output and income for the particular locale.
• Data are utilized on real per capita income growth and measures of highway capacity and quality across states during the period 1960 to 1985.
• The coefficient estimate of 0.22 on the highway capacity variable of the empirical model indicates that a one standard- deviation increase in the logarithm of highway capacity induces a 0.13 of a percent point increase in the growth of per capita income.
• It is shown that the basic relationship between highway capacity and economic growth is not reflective of a reverse causation from per capita income growth to highways.
• The decomposition of the data on urban and rural roads confirms the statistical significance of the relationship between highway capacity and private sector productivity.

Investment and Financing Policies:

• Economic analysis.

• A simple model is employed to simulate the effects of higher public investment on the aggregate economy. It is assumed that public investment during the period 1970 to 1980 remained near the average for 1953 to 1969, thereby eliminating most of the actual decline.
• The result suggest that the increased public investment would have raised the rate of return to private capital from 7.9 percent to 9.6 percent and the rate of productivity growth from 1.4 percent to 2.1 percent for the 1970-88 period.
• Next, the relationship between private productivity and public capital investment across states is explored, by including governmental capital as an intermediate input in a generalized Cobb-Douglas production function.
• The result from this model is that while the marginal product of private capital is between 9 and 12 percent, the marginal product of public capital exceeds 200 percent. An attempt is made to demonstrate the robustness of this relationship by varying the assumed depreciation and using instrumental variables.

Investment and Financing Policies:

• Economic analysis.

• The paper explores the impact of infrastructure investment on three measures of state-level economic performance. These data are first constructed and then used to estimate state production functions, to explore the relationship between public and private investment, and to analyze employment growth within a business location model.
• Constructed estimates of the public and private capital stocks by state for 1970 to 1986 are used as inputs in a pooled cross-section production function. The results show that public capital has a significant, positive impact on the output at the state level. The regression coefficients imply a marginal productivity of 35 percent for both private and public capital. When public capital was disaggregated, water and sewer systems had the largest impact on output, followed by highways, with other public capital exhibiting a very small impact.
• Next, a stock adjustment model is employed, where the desired stock of private capital is related to the level of output, the stock of labor, and the stock of public capital, and also to the marginal productivity of private capital. The results indicate that, on balance, public capital investment stimulate private investment.
• Finally, a business location model that includes a measure of the public capital stock is used to analyze employment growth. The results confirm that public capital has a positive influence on employment growth, all else equal.

Investment and Financing Policies:

• Economic analysis.

• The question of whether public capital is undersupplied is addressed directly in this paper. Peterson basically accepts the Aschauer argument that the marginal productivity of public capital is extremely high compared to private capital.
• A partial answer to the question whether public infrastructure is undersupplied is obtained through voters' revealed preferences as expressed in bond elections and other referenda. If public officials were trying to satisfy the median voter, as theory suggests, they would submit frequent bond proposals for consideration in order to assess voter demand. As a result, bond elections should be closely contested with bond approval rates and margins close to 50 percent.
• It is found that the margin of approval of bond proposals exceeded 66 percent on average. This suggests an undersupply.
• Three possible reasons for undersupply of public capital are suggested. The first emphasizes spillover effects. As a result local taxpayers will choose to provide a suboptimal level of infrastructure capital.
• A more innovative explanation is the notion that the undersupply may be traced to the "fear of rejection" on the part of public officials.
• The third explanation suggests that the political process systematically underweights the benefits that accrue to businesses.

• Economic analysis.

• The purpose of this study is to estimate the effects of public infrastructure on regional development, as measured by per capita personal income.
• The paper makes two contributions. First, public capital stock estimates are used instead of simply using expenditures. Second, a simple model is constructed of both the effects of local public infrastructure on personal income and the effect of personal income on the allocation of local public outlays. The resulting system of equations highlights the potential single-equation estimation bias if public investment is considered exogenous, as is the case with other studies.
• Results derived from annual data for 28 metropolitan areas from 1980 to 1984 reveal that public capital stock has positive and statistically significant effects on per capita personal income.
• The effects come through two channels. The first is through the actual construction of the public capital stock. The second effect comes through the public capital stock as an unpaid factor in the production process and a consumption good of households.
• It is concluded that public capital stock is an important input into the regional production process, which has long run consequences for enhancing a region's productivity, and thus its competitive advantage. Therefore, well maintained public infrastructure should be an important component of any policy package designed to promote regional economic development.

Investment and Financing Policies:

• Economic analysis.

• The authors accept the essentials of Aschauer's methodology. It assumes an aggregate Cobb-Douglas technology in which output is produced by the usual private-sector capital and labor inputs, plus public-sector capital, or infrastructure. However, this methodology is applied to a broader range of data: several OECD countries and a longer data set for the United States.
• The results provide little support for Aschauer's hypothesis. While infrastructure growth slowed in the 1970s in all twelve of the countries examined, this was accompanied by a deceleration of private-sector total factor productivity (TFP) in only half of them.
• Time-series regressions tend to yield non-robust and sometimes implausible parameter estimates, suggesting a fundamental problem with the underlying methodology.
• Examination of a century of data for the United States implies that there was no relationship between productivity and infrastructure capital in the United States except for the post-war period examined by Aschauer.
• Finally, the cross-section correlation between post-war infrastructure investment and TFP growth is not robust either, as it depends on how infrastructure is defined. In overall, the regression results can not support a policy recommendation of a sharp acceleration of infrastructure investment.

Investment and Financing Policies:

• Economic analysis.

• The purpose of this paper is to evaluate alternatives to Aschauer and Munnell's frameworks for measuring the contribution of public infrastructure capital in Sweden to private sector output and productivity growth.
• It is concluded that the Cobb-Douglas production function models developed by Aschauer and Munnell have a number of serious drawbacks. When these models are estimated using Swedish data, the estimated coefficients on public infrastructure capital are statistically significant, but do not have meaningful interpretation.
• When a number of dual cost functions are implemented the obtained results are more plausible. The main finding is that increases in public infrastructure capital, other things equal, reduce private costs.
• It is found that amount of public infrastructure capital that would rationalize the cost savings incurred by the private business sector in Sweden is less than what is in fact available in 1988. However, the extent of excess public infrastructure has been falling in the 1980s.

Interpretation of the findings:

• First, the estimated benefits do not incorporate the cost and time savings of public capital to final consumers.
• Second, it is worthwhile investigating results when public infrastructure capital is disaggregated.
• Third, optimal pricing of the public infrastructure should be taken into account in a future research.

Investment and Financing Policies:

• Economic analysis.

• This study examines the effects of publicly financed infrastructure and R&D capital on cost structure and productivity performance of twelve two-digit U.S. manufacturing industries.
• The results suggest that there are significant productive effects from these two types of capital. Their effects on the cost structure vary among industries.
• An increase in the two types of capital causes both a downward shift of the cost functions in each industry, generating productivity inducement, and an increase in factor demand.
• The marginal benefits of the services provided by the two types of capital and the "social" rates of return to these capitals for the investigated industries are also calculated.
• These marginal benefits range on average from 0.0011 to 0.0102. The social rates of return, for the two forms of public capital, vary between 0.0492 and 0.0872.

Main conclusions from this study:

• The public infrastructure capital does affect the cost productivity of the private sector industries. The magnitude of these effects is, however, smaller than has been reported in the literature.
• Second, other types of publicly financed capital affect the cost and productivity of different industries and have high social rate of return.