DOES RAILWAY LINES INVESTMENTS MATTER FOR ECONOMIC GROWTH?

Prince  Fosu

doi:10.2478/eoik-2021-0004

Authors

Prince Fosu School of Analytics, Finance and Economics, Southern Illinois University Carbondale, Illinois, USA

DOI:

https://doi.org/10.2478/eoik-2021-0004

Keywords:

economic growth, railway lines, VECM, United States

Abstract

The $20.81 trillion U.S. economy relies on a vast infrastructure network to thrive; however, empirical studies that examined that impact of infrastructure on economic growth in the U.S. are limited. Tis study’s principal objective was to examine the eﬀect of railway lines on economic growth using annual data from 1980 to 2016 and cointegration analysis. The results showed a positive and significant impact of railway lines on economic growth in the long-run and short-run. The impulse response analysis indicates that shocks to railway lines initially cause GDP growth rates to increase and decrease continuously. The variance decomposition analysis also suggests that overtime, railway lines contribute largely to the variations in economic growth followed by inﬂation and population. Tis study’s outcome has important implications not only for the U.S. economy but also for developing and emerging countries. The results suggest that railway lines investments matter for economic growth in the U.S.

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