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The effects of public spending composition on firm productivity

Kneller, Richard; Misch, Florian

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Florian Misch


This paper exploits the unique institutional features of South Africa to estimate the impact of provincial public spending on firm productivity. In contrast to existing microeconomic evidence, we explore the effects of fiscal expenditures and remove the effects of revenue raising policies. Our identification strategy is based on differences in the effects of public spending across firms within the same industry and province. We show that public spending composition affects productivity depending on the capital intensity of firms, with less capital intensive firms being particularly affected. These effects appear to be robust.

Journal Article Type Article
Publication Date May 26, 2014
Deposit Date Jul 30, 2015
Publicly Available Date Jul 30, 2015
Journal Economic Inquiry
Print ISSN 0095-2583
Electronic ISSN 1465-7295
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 52
Issue 4
Keywords Public Spending Composition, Productive Public Spending, Firm Productivity
Public URL
Publisher URL
Additional Information This is the peer reviewed version of the following article: Kneller, R. and Misch, F. (2014), The effects of public spending composition on firm productivity. Economic Inquiry, 52: 1525–1542. doi: 10.1111/ecin.12092 which has been published in final form at This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.


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