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Public Capital and Regional Economic Growth: a SVAR Approach for the Spanish Regions

Author

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  • Márquez, Miguel A.

    (Department of Economics, University of Extremadura, Spain-EU. Regional Economics Applications Laboratory (REAL), University of Illinois at Urbana-Champaign, USA)

  • Ramajo, Julián

    (Department of Economics, University of Extremadura, Spain-EU. Regional Economics Applications Laboratory (REAL), University of Illinois at Urbana-Champaign, USA)

  • Hewings, Geoffrey J. D.

    (Regional Economics Applications Laboratory (REAL), University of Illinois at Urbana-Champaign, USA)

Abstract

Recently, a significant share of the empirical analysis on the impact of public capital on regional growth has used multivariate time-series frameworks based on vector autoregressive (VAR) models. Nevertheless, not as much attention has been dedicated to the analysis of the long-run determinants of regional growth processes using multi-region panel data and applying panel integration and co-integration techniques. This paper estimates the dynamic domestic effects of public infrastructure using a structural vector autoregressive (S-VAR) methodology for the Spanish regions. From a methodological point of view, the paper contains several features that can be viewed as a contribution to the existing empirical literature. First, the important issues of the stationarity of the data and the existence and estimation of cointegrating relationships in the long-run are addressed in the context of the analysis of panel data. Secondly, the long-run cointegrating production function is embedded within structural vector error correction (S-VEC) shortrun models to produce consistent estimates of impulse responses, contrary to many researchers who have estimated unrestricted VAR models in levels or VAR models in first differences. The estimates reveal new results with respect to the previous empirical evidence.

Suggested Citation

  • Márquez, Miguel A. & Ramajo, Julián & Hewings, Geoffrey J. D., 2011. "Public Capital and Regional Economic Growth: a SVAR Approach for the Spanish Regions," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 21, pages 199-223.
  • Handle: RePEc:ris:invreg:0038
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    1. Farhadi, Minoo, 2015. "Transport infrastructure and long-run economic growth in OECD countries," Transportation Research Part A: Policy and Practice, Elsevier, vol. 74(C), pages 73-90.

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    More about this item

    Keywords

    Public capital; regional growth; VAR methodology; Spain;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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