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Macroeconomic Effects From The Regional Allocation Of Public Capital Formation

  • Jaime Alonso-Carrera
  • Maria Jesus Freire-Seren


  • Baltasar Manzano

This paper proposes a multi-regional, general equilibrium model with capital accumulation to analyze the economic impact of the spatial distribution of public capital formation. This model is calibrated and solved by using data for the Spanish economy in order to simulate some comparative dynamic exercises of fiscal policy changes. These analyses illustrate the role that public investment plays in generating the existing imbalances in regional development. This is done by computing the spillover effects and the opportunity costs of regional distribution of public investment. Finally, two rankings of regional priorities in public investment can be derived: one based on the criterion of reducing regional disparities, and other based of an efficiency criterion.

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Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2008-09.

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Length: 34 pages
Date of creation: May 2008
Date of revision:
Handle: RePEc:een:camaaa:2008-09
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