Spillover effects of public capital formation: evidence from the Spanish regions

By Alfredo Pereira Jr., Oriol Roca‐Sagalés. 2003

188 citations recorded by the source corpus.

Maybe because of the inconclusive nature of the results on the impact of public capital on output at the regional level, the issue of the possible existence of the regional spillovers from public capital formation has received little attention. The objective of this paper is to provide evidence on the possible existence of such spillovers. We consider the case of Spain and its seventeen regions. Our methodological approach consists in estimating an aggregate VAR model for Spain as well as seventeen region-specific VAR models in which both capital installed in the region and capital installed outside the region are allowed to play a role in enhancing regional output. The estimation results can be summarized as follows. The aggregate effects of public capital formation in Spain are important. They cannot, however, be captured in their entirety by the direct effects in each region from public capital installed in the region itself. When for each region both the capital installed in the region and the capital installed outside the region are considered the total disaggregated effect from the seventeen regional models are very much in line with the aggregate results. Furthermore, the aggregate effect seems to be due in almost equal parts to the direct and spillover effects of public capital formation. Ultimately, this paper establishes the relevance of both capital installed in each region and spillover effects in the understanding of the regional decomposition of the aggregate effects of public capital formation. In doing so it opens the door to some tantalizing and potentially highly charged research issues in terms of the determination of the optimal location of public investment projects.

Subfields: Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/bfd3003118b0c3111e571752c9474dda9c397e41

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Citations in the corpus

Does Infrastructure Investment Lead to Economic Growth or Economic Fragility? Evidence from China (2016, unknown): “ct productivity effects were found to be weak or not found at all, the macro-studies began to insist on indirect impacts through spillover effects. Using aggregate and regional-level data from Spain, Pereira and Roca-Sagalés (2003, p. 238), for example, argued: Does infrastructure investment lead to”
On the economic effects of public infrastructure investment: A survey of the international evidence (2013, background): “In general, output elasticities are positive and relatively large in Japan (Mera, 1973; and Merriman, 1990), Spain (Cutanda and Paricio, 1992; and Mas et al., 1996), Belgium (Everaert and Heylen, 2004) and Germany (Stephan, 2003) and substantially lower for France (Cadot et al., 1999) and the more d”
Impacts of Transport Infrastructure on Productivity and Economic Growth: Recent Advances and Research Challenges (2013, unknown): “However, recent studies by Pereira and De Fructos (1999), Pereira (2000), Pereira and Roca-Sagalés (2003) and Jiwattanakulpaisarn et al. (2011) strongly suggest that the analysis on the effects of infrastructure investment on productivity requires the consideration of dynamic feedback effects…”
Transport infrastructures, spillover effects and regional growth: evidence of the Spanish case (2005, background): “Finally, it is important to mention that the results obtained must be interpreted with caution for two reasons.”
Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain (2012, background): “The first author that emphasized the relation between infrastructure and private productivity was Ratner (1983). He introduced public capital stock as an input in the aggregate production function, and found that it had a small but significant effect on the level of production. Aschauer (1989a) also”
The Dynamic Effects of Public Capital: VAR Evidence for 22 OECD Countries (2005, unknown): “Pereira and Roca Sagales (2003) Spain 1970‐1995 (A) VAR (FD) K G , K P , N, Y Positive”
Network Effects of Public Transport Infrastructure: Evidence on Italian Regions (2012, unknown): “The approach of Pereira and Roca-Sagalés (2003) shares a number of features in common with the methodology set forth in the present paper, although we shift the focus on coordinated vs. idiosyncratic public capital accumulation decisions, instead of internal vs. external to the region.”