SOM theme C: Coordination and Stabilization of Economic Systems SOM theme D: Structural Change and Long-term Development

The effects of infrastructure investment on production are usually studied with post-war data. This paper finds strong evidence of a positive impact of infrastructure investment on the Netherlands’GDP in the second half of the 19 century. A brand new historicalth data set is exploited that allows the distinction between basic and complementary infrastructure investment. Whereas the effect is significantly positive for basic investment, it is absent for complementary investment. Rather than estimating production functions as in the well-known model of Aschauer (1989a), data-oriented econometric techniques are employed, particularly Granger-causality tests in a Vector AutoRegression (VAR) framework. The VAR model is analysed with impulse response analyses and variance decompositions