Highway infrastructure and local outcomes: measuring causal effects of infrastructure investments using cost-related instrumental variables
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Universidade Federal de Minas Gerais
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An extensive number of studies has examined the role of infrastructure on economic growth and development. However, results vary critically due to the empirical design and methodology. In this paper, we propose a novel identification strategy using the main infrastructure project costs as instrumental variables for our highway investment variable. We use data on national highway investment to estimate the causal impact of road infrastructure on local (municipal) outcomes. Our results show that, conditional on controls, our cost related IV identification strategy is suitable at identifying highway impacts on municipal outcomes. Findings remain unchanged under several specifications. Using our preferred estimated elasticity of 0.01, we calculate a return rate to highway investment of 24.2%, demonstrating a high road infrastructure rentability in Brazil.
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Infraestrutura (Economia), Desenvolvimento Local, Variáveis instrumentais (Estatistica), Custo, Rodovia
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https://www.anpec.org.br/sul/2023/submissao/files_I/i2-5489c19d5f7cdeb36b63c236a14eb3b9.pdf