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Spatial spillovers of economic growth and public spending in Mexico: Evidence from a SpVAR model, 1999–2019

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  • Andrés-Rosales, Roldán
  • Quintana-Romero, Luis
  • de Jesús-Almonte, Leobardo
  • del Río-Rama, María de la Cruz

Abstract

The Mexican government has been decreasing its participation as the main investor in the Mexican economy, but it has been increasing its current spending in the different states of the country. This behaviour has influenced the slow economic growth of Mexico in the period 1999–2019. However, the effects of these spending decisions have had a heterogeneous effect on the growth levels of Mexican states. The aim of this paper is to identify these effects by considering the impact that a federal entity generates on its neighbours (push-out effect) and the benefits it receives from its close neighbours (push-in effect) when there are spillovers of this economic growth. The methodology used to analyse the relationship between economic growth and public spending makes use of an econometric model with Spatial Autoregressive Vectors (SpVAR) to test the existing causal relationships. With the SpVAR model we can show the spatial effects of interaction between the thirty-two states that make up the Mexican geography in the period 1999–2019 and to determine spatial spreading and growth causality. The results obtained make it possible to establish that economic growth spreads from one federal entity to another over time and that public spending does not have a fundamental influence on this growth, due to the strong reduction in investment spending.

Suggested Citation

  • Andrés-Rosales, Roldán & Quintana-Romero, Luis & de Jesús-Almonte, Leobardo & del Río-Rama, María de la Cruz, 2021. "Spatial spillovers of economic growth and public spending in Mexico: Evidence from a SpVAR model, 1999–2019," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 660-673.
    • Handle: RePEc:eee:ecanpo:v:71:y:2021:i:c:p:660-673
    DOI: 10.1016/j.eap.2021.07.004
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    More about this item

    Keywords

    Economic growth; Economic growth spillovers; Public spending; Push-out effect; Push-in effect and spatial VAR;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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