This paper considers the relationship between total private factor productivity and stock and flow government expenditure variables. The empirical results indicate that (i) the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending, (ii) military capital is not productive, and (iii) the public stock of structures--especially a "core" infrastructure of streets, highways, sewers, and water systems--has more explanatory power for productivity than does the stock of equipment. The paper also suggests an important role for the net public capital stock in the "productivity slowdown" of the last fifteen years.
- Federal Reserve Bank of Minneapolis. Research Department.
Download a zip file that contains all the files in this work.