DOES RAILWAY LINES INVESTMENTS MATTER FOR ECONOMIC GROWTH?

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. This 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. This 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.