Empirical Analysis of Transportation Investment and Economic Development at State, County and Municipality Level

Although positive elasticity between transportation investment and economic development has been documented in many studies, the magnitude of the measured effect seems to decline significantly as the econometric model is further refined, mainly with regard to space and time lags. That is, the use of national or state data produces elasticity results which are much larger than when using county or municipality data. Similarly, when a lag between the times when the transportation investments are made and when the economic benefits transpire is introduced into the econometric model, the measured elasticities decline with the size of the lag. This paper investigates these issues analytically and empirically and provides a plausible explanation. The authors do so by using alternative econometric models and applying them to a database which is composed of longitudinal state, county and municipality observations from 1990 to 2000. Results show that transportation investments produce strong spillover effects relative to space and time. Many reported empirical results are likely to be overly biased unless these factors are taken into account.

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  • Authors:
    • Berechman, Joseph
    • Ozmen, Dilruba
    • Ozbay, Kaan
  • Publication Date: 2006-11


  • English

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  • Accession Number: 01044681
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Mar 8 2007 11:55PM