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The Measurement of Spatial Productivity Spillovers from Public Capital

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  • Alvarez, Antonio
  • Arias, Carlos
  • Orea, Luis

Abstract

This paper analyzes the properties of a frequently-used test of spatial spillover effects of public capital when using regional panel data. This test compares the estimates of the coefficients of public capital in two different production functions. The benchmark model includes the public capital of each region as an explanatory variable. In the second model the public capital of each region is augmented with public capital in neighbouring regions. Using basic regression algebra, we show that the results of this “pseudo-test” are not necessarily related to the existence of spillover effects.

Suggested Citation

  • Alvarez, Antonio & Arias, Carlos & Orea, Luis, 2004. "The Measurement of Spatial Productivity Spillovers from Public Capital," Efficiency Series Papers 2004/08, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
  • Handle: RePEc:oeg:wpaper:2004/08
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    File URL: https://www.unioviedo.es/oeg/ESP/esp_2004_08.pdf
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    References listed on IDEAS

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    1. Douglas Holtz-Eakin & Amy Schwartz, 1995. "Spatial productivity spillovers from public infrastructure: Evidence from state highways," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(3), pages 459-468, October.
    2. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    3. Moreno, Ramon & Trehan, Bharat, 1997. "Location and the Growth of Nations," Journal of Economic Growth, Springer, vol. 2(4), pages 399-418, December.
    4. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
    5. Rosina Moreno Serrano & Manuel Artis Ortuno & Enrique Lopez Bazo & Jordi Surinach Caralt, 1997. "Evidence on the complex link between infrastructure and regional growth," Working Papers in Economics 19, Universitat de Barcelona. Espai de Recerca en Economia.
    6. Ratner, Jonathan B., 1983. "Government capital and the production function for U.S. private output," Economics Letters, Elsevier, vol. 13(2-3), pages 213-217.
    7. Matilde Mas & Joaquin Maudos & Francisco Perez & Ezequiel Uriel, 1996. "Infrastructures and Productivity in the Spanish Regions," Regional Studies, Taylor & Francis Journals, vol. 30(7), pages 641-649.
    8. Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
    9. C. Alicia Avilés Zugasti & Rosario Gómez García & José Sánchez Maldonado, 2003. "Capital público, actividad económica privada y efectos desbordamiento: Un análisis por Comunidades Autónomas de los sectores Industria y Construcción en España," Hacienda Pública Española, IEF, vol. 165(2), pages 25-51, June.
    10. Mercedes Gumbau Albert & Joaquín Maudos Villarroya & Pedro Cantos, 2002. "Transport Infrastructures And Regional Growth: Evidence Of The Spanish Case," Working Papers. Serie EC 2002-27, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    11. Garcia-Mila, Teresa & McGuire, Therese J & Porter, Robert H, 1996. "The Effect of Public Capital in State-Level Production Functions Reconsidered," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 177-180, February.
    12. Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
    13. Pereira, Alfredo Marvao & Roca-Sagales, Oriol, 2003. "Spillover effects of public capital formation: evidence from the Spanish regions," Journal of Urban Economics, Elsevier, vol. 53(2), pages 238-256, March.
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    Cited by:

    1. Antonio Alvarez & Carlos Arias & Luis Orea, 2006. "Econometric testing of spatial productivity spillovers from public capital," Hacienda Pública Española, IEF, vol. 178(3), pages 9-21, September.
    2. Piotr Rosik, 2007. "Przestrzenne efekty zewnętrzne inwestycji infrastrukturalnych. Przypadek Galicii," Gospodarka Narodowa, Warsaw School of Economics, issue 1-2, pages 83-97.

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    Keywords

    productivity; public capital; spillover effects;

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