Public expenditure on transport and macroeconomic performance: Empirical evidence from the United States

The analysis begins by examining the macroeconomic relationship between public expenditure on transport and output/investment in the US using annual data for the period 1959-2003. In practice, public expenditure on transport is divided up into four categories (waterways, public transit and the railroads, aviation and highways) so in the second part of the analysis we test for Granger causality between each category of spending and output/investment. But the division of public spending on transport may give rise to trade-offs/complementarities so in the final part of the analysis Granger causality tests are used to investigate this issue. The results suggest, among other things, that changes in private investment Granger cause changes in public spending on transport. In particular, the findings suggest that changes in private investment Granger cause changes in government spending on the waterways and the highways.