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Optimal endowments of public investment: an empirical analysis for the spanish regions


  • Oscar Bajo-Rubio


  • Carmen Diaz-Roldan


  • M. Dolores Montavez-Garces



The aim of this paper is to estimate the optimal endowments of public investment in Spanish regions. Starting from the standard dynamic neoclassical model, augmented with the public capital stock, the optimal condition for the provision of public capital would be that, in the steady state, the marginal productivities of both public and private capital should be equal. In the empirical application we will estimate a growth equation derived from a simple Cobb-Douglas production function, where the coefficients on the rates of investment in private and public capital would be their respective marginal productivities. The econometric estimation of such an equation with data for the Spanish regions would provide us estimates of the marginal productivities of both factors, which would allow us to infer whether public capital stock in the Spanish regions would be insufficient or otherwise excessive.

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  • Oscar Bajo-Rubio & Carmen Diaz-Roldan & M. Dolores Montavez-Garces, 2001. "Optimal endowments of public investment: an empirical analysis for the spanish regions," ERSA conference papers ersa01p173, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa01p173

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    References listed on IDEAS

    1. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    2. de la Fuente, Angel, 2002. "On the sources of convergence: A close look at the Spanish regions," European Economic Review, Elsevier, vol. 46(3), pages 569-599, March.
    3. Karras, Georgios, 1997. "Is Government Investment Underprovided in Europe? Evidence from a Panel of Fifteen Countries," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 50(2), pages 223-235.
    4. Jan-Egbert Sturm & Gerard H. Kuper & Jakob de Haan, 1996. "Modelling government investment and economic growth at the macro level: A review," Working Papers 29, Centre for Economic Research, University of Groningen and University of Twente.
    5. Berndt, Ernst R & Hansson, Bengt, 1992. " Measuring the Contribution of Public Infrastructure Capital in Sweden," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 151-168, Supplemen.
    6. Carmela Martin & Francisco J. Velazquez., 2001. "An Assessment of Real Convergence of Less Developed EU Members: Lessons for the CEEC Candidates," European Economy Group Working Papers 5, European Economy Group.
    7. Óscar Bajo Rubio & Carmen Díaz Roldán & M.a Dolores Montávez Garcés, "undated". "Fiscal Policy And Growth Revisited: The Case Of The Spanish Regions," Working Papers 19-02 Classification-JEL , Instituto de Estudios Fiscales.
    8. 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.
    9. Berndt, Ernst & Hansson, Bengt, 1992. "Measuring the Contribution of Capital in Sweden," Working Paper Series 365, Research Institute of Industrial Economics.
    10. Juan R. Cuadrado-Roura & Begoña García-Greciano & José Luis Raymond, 1999. "Regional Convergence in Productivity and Productive Structure: The Spanish Case," International Regional Science Review, , vol. 22(1), pages 35-53, April.
    11. 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.
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    Cited by:

    1. Jaime Alonso-Carrera & María Jesús Freire-Serén & Baltasar Manzano, 2004. "Rentabilidad social de la inversión pública española en infraestructuras," Hacienda Pública Española, IEF, vol. 170(3), pages 81-103, september.
    2. Boopen Seetanah, 2011. "Optimal endowments of transport investment: an empirical analysis for mauritius," Empirical Economics, Springer, vol. 40(3), pages 827-838, May.
    3. Antonio Morales & Pablo Brañas Garza, 2003. "Computational Errors in Guessing Games1," Economic Working Papers at Centro de Estudios Andaluces E2003/11, Centro de Estudios Andaluces.

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General


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