Estimation of the Structural Parameters of Economic Growth Model with Social Infrastructure

Abstract

 In this paper, we propose a model that can specify causal structure between public capital and economic growth in order to analyze the impact of public capital on economic growth. We introduce Real Business Cycle (RBC) as the basis of the model and we deal with human capital and “indivisible labor” to estimate the structural parameters of the model by using time series data. Then, we use state-space representation of the model with VAR to measures the output elasticity of public capital. We analyze the impulse response and the sensitivity for the fluctuation of the data.