Working Paper: NBER ID: w2131
Authors: Michael J. Boskin; Marc S. Robinson; Alan M. Huber
Abstract: Measures of the state and local government capital stock and investment are necessary inputs into several areas of economic analysis, including the measurement of national wealth and its growth. We estimate net investment and depreciation of state and local government nonresidential capital. In aggregate, we estimate a net state and local nonresidential capital stock of $1.8 trillion in 1985, 17% larger than that estimated by the Bureau of Economic Analysis. Net state and local government investment has exceeded the state and local deficit annually for the last forty-five years. While the fraction of state and local purchase of goods and services devoted to net investment has fallen, it has exceeded federal government net capital formation except during defense buildups and has averaged more than 40% of private fixed nonresidential net investment since 1951. Similar comparisons reveal that the state and local government net capital stock substantially exceeds state and local debt, and is about twice the federal government capital stock.
Keywords: State and Local Government; Capital Stock; Net Investment
JEL Codes: H11; H72; R52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| accurate estimates of capital stock (E22) | improved understanding of national wealth and fiscal policy (H69) |
| government capital formation (H54) | overall savings rates (D14) |
| government investment (H54) | net national saving (D14) |
| methodological approach (C90) | resulting capital estimates (G31) |
| state and local investments (H76) | federal investments (H54) |
| fiscal pressures (E62) | decreased investment relative to overall expenditures (E20) |