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The public sector and convergence with spatial interdependence: empirical evidence from Spain

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  • Inmaculada C. Álvarez
  • Javier Barbero

Abstract

We propose a framework to analyse convergence between regions, incorporating the public sector and technological knowledge spillovers in the context of a Neoclassical Growth Model. Second, we apply novel estimation methods pertaining to the spatial econometrics literature introducing a spatial Durbin panel data model based on instrumental variables and maximum-likelihood estimation. Our model makes it possible to analyse, in terms of convergence, the results obtained in Spanish regions with the policies implemented during the period 1980--2011. The results support the idea that education and fiscal policies have a positive effect on regional development and cohesion. Therefore, we can conclude that it is possible to obtain better results for regional convergence with higher rates of public investment in education and tax revenues. We also obtain interesting results that confirm the existence of spillover effects in economic growth and public policies, identifying their magnitude and significance.

Suggested Citation

  • Inmaculada C. Álvarez & Javier Barbero, 2016. "The public sector and convergence with spatial interdependence: empirical evidence from Spain," Applied Economics, Taylor & Francis Journals, vol. 48(24), pages 2238-2252, May.
  • Handle: RePEc:taf:applec:v:48:y:2016:i:24:p:2238-2252
    DOI: 10.1080/00036846.2015.1117048
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    Cited by:

    1. Álvarez, Inmaculada C. & Gude, Alberto & Orea, Luis, 2019. "Effects of inter-industry and spatial spillovers on regional productivity: Evidence from Spanish panel data," Efficiency Series Papers 2019/01, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    2. Orea, Luis & Álvarez, Inmaculada C., 2019. "Spatial Production Economics," Efficiency Series Papers 2019/06, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).

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