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HOW DOES INFRASTRUCTURE AFFECT ECONOMIC GROWTH? INSIGHTS FROM A SEMIPARAMETRIC SMOOTH COEFFICIENT APPROACH AND THE CASE OF TELECOMMUNICATIONS IN CHINA
Author(s) -
Zhang Yinfang,
Sun Kai
Publication year - 2019
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12770
Subject(s) - endogeneity , economics , context (archaeology) , econometrics , china , empirical research , microeconomics , telecommunications , computer science , statistics , mathematics , paleontology , political science , law , biology
This paper attempts to shed new empirical light on infrastructure's role in economic growth using a semiparametric smooth coefficient model to avoid specification problems in some existing studies and admit infrastructure‐induced nonlinearity and parameter heterogeneity. Estimated by a three‐step procedure that controls for endogeneity in both the regressors and the environmental variable (infrastructure), the model is applied to the empirical context of telecommunications infrastructure in a fast‐growing economy, China. The results reveal that telecommunications contribute to output through various sources, namely its neutral and non‐neutral impacts. The total/net effect is positive but largely decreases with telecommunications stocks. ( JEL L96, O4, O1)