INFRASTRUCTURE, PUBLIC CAPITAL AND GROWTH IN THE BRAZILIAN ECONOMY

Abstract

This study tries to measure the contribution of public capital and infrastructure capital to the growth of the Brazilian economy using an expanded aggregate production function. We check for the stationarity of the data and run two models: one with public capital and another with public capital and infrastructure capital. In our specifications the public capital variable is found to be weakly significant. The infrastructure capital variable, on the other hand, is found to be significant. When we test for Granger-causality we find that infrastructure is the only variable that causes future growth and that it is not caused by past growth. Given these results, we conclude that there are evidences of the importance of infrastructure capital, especially the energy subsector, in helping to promote economic growth.