Regional Public Stock Reductions in Spain: Estimations from a Multiregional Spatial Vector Autorregressive Model
DOI:
https://doi.org/10.18335/region.v4i1.146Abstract
The estimation of the impact of public investment on regional economic growth requires consideration of the spatio-temporal dynamics among the state variables of each region. Recent austerity policies in Spain that feature temporary decreases in the accumulation of regional public capital should thus be evaluated in terms of their impact on the economy as a whole, on specific regions together with the spillovers effects from one region to the rest of the regional system. Applying a multiregional integrated specification to model interdependencies across regions, our results indicate that, while global decreases in public investment have a homogenously negative effect on the output of all the regions, the Spanish regions portray heterogeneous responses from localized public capital stock reductions over the simulation period considered.
References
Agénor, P.R. and Moreno-Dodson, B. (2006): “Public Infrastructure and Growth: New Channels and Policy Implications”, Policy Research, Working Paper, No. 4064, World Bank.
Aschauer, D. A. (1989): “Is public expenditure productive?”, Journal of Monetary Economics, 23 (2), 177–200.
Baxter, M. and King, R. G. (1993): “Fiscal Policy in General Equilibrium”, The American Economic Review, 83 (3), 315-334.
Blažek, J. and Macešková M. (2010): “Regional Analysis of Public Capital Expenditure: To Which Regions Is Public Capital Expenditure Channelled – to ‘Rich’ or to ‘Poor’ Ones?”, Regional Studies, 44 (6), 679-696.
Boarnet, M.G. (1998): “Spillovers and Locational Effects of Public Infrastructure”, Journal of Regional Science, 38, 381-400.
Bustos, A., Cutanda, A., Díaz, A., Escribá, F.J., Murgui, M.J. and Sanz, M.J. (2008): “La BD.MORES en base 2000: nuevas estimaciones y variables”, Documento de Trabajo D-2008-02, Dirección General de Presupuestos, Ministerio de Economía y Hacienda.
Caminal, R. (2004): “Personal redistribution and the regional allocation of public investment”, Regional Science and Urban Economics, 34 (1), 55-69.
Capello, R. (2009) “Spatial Spillovers and Regional Growth: a Cognitive Approach,” European Planning Studies, 17, 639-658.
Cheshire, P. and Carbonaro G. (1996), “Urban Economic Growth in Europe,” Urban Studies, 33, 1111-1128.
Cohen, J. and Catherine Morrison P. (2007): “The Impacts of Transportation Infrastructure on Property Values: A Higher-Ordered Spatial Econometrics Approach,” Journal of Regional Science, 47 (3), 457-478.
Dees, S., Di Mauro, F., Pesaran, M.H. and Smith L.V. (2007): “Exploring the international linkages of the euro area: a global VAR analysis”, Journal of Applied Econometrics, 22, 1-38.
De la Fuente, A. (2004): “Second-best redistribution through public investment: a characterization, an empirical test and an application to the case of Spain”, Regional Science and Urban Economics, 34, 489-503.
De la Fuente, A. (2010): ”Infrastructures and productivity: an updated survey”, UFAE and IAE Working Papers 831.10, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
Deliktas, E., Önder, A.Ö. and Karadag, M. (2009): "The spillover effects of public capital on the Turkish private manufacturing industries in the geographical regions", The Annals of Regional Science, 43 (2), 653-378.
Deno, K. (1988): “The Effects of Public Capital on U.S. Manufacturing activity: 1970 to 1987”, Southern Economic Journal, 53, 400–411.
Destefanis, S. and Sena, V. (2005): “Public Capital and Total Factor Productivity: New Evidence from the Italian Regions 1970-98”, Regional Studies, 39 (5), 603–617.
Devarajan, S., Swaroop, V. and Zou, H.F. (1996): “The Composition of Public Expenditure and Economic Growth”, Journal of Monetary Economics, 37, 313-344.
Dietzenbacher, E., van der Linden. J.A., Steenge, A.E. (1993) “The Regional Extraction Method: EC Input–Output Comparisons,” Economic Systems Research, 5, 185-206.
Garcia-Mila, T., McGuire, T.J. and Porter, R.H. (1996): “The Effect of Public Capital in State-Level Production Functions Reconsidered”, The Review of Economics and Statistics, 78 (1), 177-180.
Gramlich, E.M. (1994): "Infrastructure Investment: a Review Essay", Journal of Economic Literature, 32 (3), 1176-1196.
Heintz, J. (2010): “The impact of public capital on the US private economy: new evidence and analysis”, International Review of Applied Economics, 24 (5), 619-632.
Henderson, D. and Kumbhakar, S. (2006): “Public and Private Capital Productivity Puzzle: A Nonparametric Approach”, Southern Economic Journal, 73 (1), 219-232.
Holtz-Eakin, D. (1994): “Public-Sector Capital and the Productivity Puzzle”, The Review of Economics and Statistics, 76 (1), 12–21.
Hunt, C. (2012): “The interaction of public and private capital: a study of 20 OECD members”, Applied Economics, 44 (6), DOI: 10.1080/00036846.2010.522523.
Kamps, C. (2005): The Dynamic Effects of Public Capital: VAR Evidence for 22 OECD Countries, International Tax and Public Finance, 12 (4), 533-558.
Koop, G., Pesaran, M.H. and Potter, S.M. (1996): “Impulse response analysis in nonlinear multivariate models”, Journal of Econometrics, 74, 119-147.
Llano, C., Esteban, A., Pérez, J. and Pulido, A. (2008): “La base de datos C-intereg sobre el comercio interregional de bienes en España: método y primeros resultados (1995-2006)”, Ekonomiaz, 69 (3), 245-269.
Llano, C., Esteban, A., Pérez, J. and Pulido, A. (2010): “Opening The Interregional Trade “Black Box”: The C-Intereg Database for the Spanish Economy (1995-2005)”, International Regional Science Review, 33 (3), 302-337.
Lynde, C. and Richmond, J. (1992): “The Role of Public Capital in Production”, Review of Economics and Statistics, 74, 37-44.
McGregor, P.G. and Swales, J.K. (2003) “The Economics of Devolution/Decentralisation in the UK: Some Questions and Answers,” Discussion Paper in Economics 03-13, Department of Economics, University of Strathclyde, Glasgow, Scotland. (http://www.strath.ac.uk/media/departments/economics/ researchdiscussionpapers/2003/media_34453_en.pdf)
Márquez, M.A., Ramajo, J., and Hewings, G.J.D. (2010a): “A Spatio-Temporal Econometric Model of Regional Growth in Spain”, Journal of Geographical Systems, 12, 207-226.
Márquez, M.A., Ramajo, J., and Hewings, G.J.D. (2010b): "Measuring the spillover effects of public capital: A bi-regional structural vector autoregressive analysis", Letters in Spatial and Resource Sciences, 3, 111-125.
Márquez, M.A., Ramajo, J., and Hewings, G.J.D. (2012): “Public Capital and Regional Economic Growth: a SVAR Approach for the Spanish Regions”, Investigaciones Regionales, 21, 203-227.
Márquez, M.A., Ramajo, J., and Hewings, G.J.D. (2014): “Regional growth and spatial spillovers: Evidence from an SpVAR for the Spanish regions”, Papers in Regional Science, DOI: 10.1111/pirs.12102.
Mas, M., Pérez, F. and Uriel, E. (2009), El stock y los servicios del capital en España y su distribución territorial, Fundación BBVA-Ivie.
Mas, M., Pérez, F. and Uriel, E. (Dirs.) (2011), El stock y los servicios del capital en España y su distribución territorial y sectorial (1964-2010), Documento de Trabajo No. 4, Fundación BBVA (http://www.fbbva.es/).
Melitz, M.J. and Ottaviano, G.I.P. (2008): “Market size, trade, and productivity,” Review of Economic Studies, 75, 295–316.
Moreno, R. and López-Bazo, E. (2007): “Returns to Local and Transport Infrastructure under Regional Spillovers”, International Regional Science Review, 30, 47-71.
Morrison P. and Schwartz, A. E. (1996):”State Infrastructure and Productive Performance”, The American Economic Review, 86 (5), 1095-1111.
Munnell, A. (1990): “Why has Productivity Declined? Productivity and private investment”, New England Economic Review, Federal Reserve Bank of Boston, January-February, 3-22.
Pereira, A.M., and Roca-Sagalés, O. (2003): “Spillover effects of Public Capital Formation: Evidence from the Spanish Regions”, Journal of Urban Economics, 53, 238-256.
Pesaran, M.H. and Shin, Y. (1998) “Generalized impulse response analysis in linear multivariate models”, Economic Letters, 58, 17-29.
Pesaran, M.H., Schuermann, T. and Weiner, S.M. (2004): “Modelling regional interdependencies using a global error-correcting macroeconometric model”, Journal of Business and Economic Statistics, 22 (2), 129-162.
Ramajo, J., Márquez, M.A., and Hewings, G.J.D. (2015): "Spatio-temporal Analysis of Regional Systems: A Multiregional Spatial Vector Autoregressive Model for Spain", International Regional Science Review, doi:10.1177/0160017615571586.
Ratner, J.B. (1983): “Government Capital and the Production unction for U.S. Private Output”, Economics Letters, 13, 213-217
Roca-Sagalés, O. and Sala, H. (2006): “Efectos Desbordamiento de la Inversión en Infraestructuras en las Regiones Españolas”, Investigaciones Regionales, 8, 143-161.
Roca-Sagalés, O., and Sala, H. (2010): “Public Capital Effects and Regional Spillover in Spain”, in Cuadrado-Roura, J.R. (ed.), Regional Policy, Economic Growth and Convergence, Springer-Verlag Berlin, 187-209.
Romp, W. and De Haan, J. (2007): “Public Capital and Economic Growth: A Critical Survey”, Perspektiven der Wirtschaftspolitik, 8 (S1), 6–52.
Seitz, H. (1993): “A Dual Economic Analysis of the Benefits of the Public Road Network”, The Annals of Regional Science, 27 (3), 223-239.
Sims, C.A. (1980): “Macroeconomics and reality”, Econometrica, 48 (1), 1-48.
Sturm, J.E., Kuper, G.H., and de Haan, J. (1998): “Modelling Government Investment and Economic Growth on a Macro level: a Review”, in Brakman, S., van Ees, H., and Kuipers, S.K. (eds.), Market Behaviour and Macroeconomic Modelling, MacMillan Press Ltd., London, 359-406.
Tatom, J. (1991): “Public capital and private sector performance”, Federal Reserve Bank of St. Louis Review, 73(3), 3-15.
Young, A. (1991): “Learning by Doing and the Dynamic Effects of International Trade”, Quarterly Journal of Economics, 106, 369-405.
Published
How to Cite
Issue
Section
License
Copyright (c) 2017 Miguel A Márquez, Julian Ramajo, Geoffrey Hewings
This work is licensed under a Creative Commons Attribution 4.0 International License.
REGION is an open journal, and uses the standard Creative Commons license: Copyright We want authors to retain the maximum control over their work consistent with the first goal. For this reason, authors who publish in REGION will release their articles under the Creative Commons Attribution license. This license allows anyone to copy and distribute the article provided that appropriate attribution is given to REGION and the authors. For details of the rights authors grant users of their work, see the "human-readable summary" of the license, with a link to the full license. (Note that "you" refers to a user, not an author, in the summary.) Upon submission, the authors agree that the following three items are true: 1) The manuscript named above: a) represents valid work and neither it nor any other that I have written with substantially similar content has been published before in any form except as a preprint, b) is not concurrently submitted to another publication, and c) does not infringe anyone’s copyright. The Author(s) holds ERSA, WU, REGION, and the Editors of REGION harmless against all copyright claims. d) I have, or a coauthor has, had sufficient access to the data to verify the manuscript’s scientific integrity. 2) If asked, I will provide or fully cooperate in providing the data on which the manuscript is based so the editors or their assignees can examine it (where possible) 3) For papers with more than one author, I as the submitter have the permission of the coauthors to submit this work, and all authors agree that the corresponding author will be the main correspondent with the editorial office, and review the edited manuscript and proof. If there is only one author, I will be the corresponding author and agree to handle these responsibilities.
