Abstract: Urban economics has traditionally focused on the agglomeration effects within the private economic sector. However, there remains gap for research on the effects of public goods. Using Chinese urban and rural construction data, I found that per capita public goods increase with population growth. Through a general equilibrium model that incorporates the private sector, public sector, and inter-regional population mobility, I interpret the mechanisms underlying the scale effects of public goods. These effects are primarily attributed to the variety of benefits from non-excludability, and limited by accessibility. My first-order result shows that resources should go to larger cities to utilise their advantages, and quantitatively, a one percentage point tax rate increase reduces welfare by 1.08 points as people are forced into smaller settlements. On a secondary result, the accessibility not only limits the expansion of cities, but also leads us to another dimension of understanding -- the public good budgets should focus on variable rather than fixed costs

Abstract: How does public capital affect economic structural transformation? I develop a multi-sector model incorporating public capital to answer this question. I find that an increase in public capital leads to heterogeneous changes in the productivity of each sector, which subsequently affects the evolution of relative prices among these sectors. Ultimately, these changes in prices influence sectoral consumption, investment, employment, and output through the price substitution effect. These model predictions have evidences from cross-country and cross-China provincial data. I calibrate the model by using Chinese data, and find that if China's investment in public capital were lower, we would see a slower decline in agricultural and services prices relative to manufacturing. Consequently, the process of de-agriculturalization would decelerate, while the pace of service sector expansion would accelerate.

Abstract: This paper examines the impact of public capital on economic development through its use in a specific public-capital-based sector. The model utilises an input-output framework to model production functions across sectors, considering technology, labor, and inputs like public capital. Using a Leontief inverse matrix, I show how productivity changes in one sector affect others, reducing costs and prices due to interconnected input-output relations. The main finding is that a change in public capital reduces costs for downstream purchasing sectors, and this effect is amplified through the input-output network. Specifically, sectoral expenditure shares change due to prices and income, influenced by substitution elasticities and network effects. A 100% public capital increase links to a 10.92% welfare rise, though the goods sector prices fall only by 0.88% and services only by 0.55%.