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Macroeconomic effects of the regional allocation of public capital formation

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  • Alonso-Carrera, Jaime
  • Freire-Serén, María Jesús
  • Manzano, Baltasar

Abstract

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 another based on an efficiency criterion.

Suggested Citation

  • Alonso-Carrera, Jaime & Freire-Serén, María Jesús & Manzano, Baltasar, 2009. "Macroeconomic effects of the regional allocation of public capital formation," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 563-574, September.
    • Handle: RePEc:eee:regeco:v:39:y:2009:i:5:p:563-574
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    2. Javier Barbero & Martin Christensen & Andrea Conte & Patrizio Lecca & Andrés Rodríguez‐Pose & Simone Salotti, 2023. "Improving Government Quality in the Regions of the EU and its System‐Wide Benefits for Cohesion Policy," Journal of Common Market Studies, Wiley Blackwell, vol. 61(1), pages 38-57, January.
    3. Chetan Ghate & Gerhard Glomm & Jialu Liu, 2012. "Sectoral infrastructure investment in an unbalanced growing economy: The Case of India," Discussion Papers 12-07, Indian Statistical Institute, Delhi.
    4. Lecca, Patrizio & McGregor, Peter G. & Swales, J. Kim, 2010. "Balanced Budget Government Spending in a Small Open Regional Economy," SIRE Discussion Papers 2010-68, Scottish Institute for Research in Economics (SIRE).
    5. Juntip Boonprakaikawe & Frédéric Tournemaine, 2014. "On the Macroeconomic Impact of a Regional Development Policy with Endogenous Residential Choice," The Review of Regional Studies, Southern Regional Science Association, vol. 44(1), pages 75-100, Spring.
    6. Carmen D. Ã lvarez-Albelo, 2018. "A calibration of the output elasticity of public capital," Economics Bulletin, AccessEcon, vol. 38(2), pages 761-771.
    7. Crucitti, Francesca & Lazarou, Nicholas-Joseph & Monfort, Philippe & Salotti, Simone, 2023. "Where does the EU cohesion policy produce its benefits? A model analysis of the international spillovers generated by the policy," Economic Systems, Elsevier, vol. 47(3).
    8. Halkos, George & Tzeremes, Nickolaos, 2011. "Population density and regional welfare efficiency," MPRA Paper 30097, University Library of Munich, Germany.
    9. Patrizio Lecca & Martin Christensen & Andrea Conte & Giovanni Mandras & Simone Salotti, 2020. "Upward pressure on wages and the interregional trade spillover effects under demand‐side shocks," Papers in Regional Science, Wiley Blackwell, vol. 99(1), pages 165-182, February.
    10. Anca-Stefania Sava & Bogdan-Gabriel Zugravu, 2010. "Analysis of the Correlations Between Public Capital Investments and Economic Development in Romania," Studies and Scientific Researches. Economics Edition, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, issue 15.
    11. Patrizio Lecca & Javier Barbero Jimenez & Martin Aaroe Christensen & Andrea Conte & Francesco Di Comite & Jorge Diaz-Lanchas & Olga Diukanova & Giovanni Mandras & Damiaan Persyn & Stylianos Sakkas, 2018. "RHOMOLO V3:A Spatial Modelling Framework," JRC Research Reports JRC111861, Joint Research Centre.
    12. Ott, Ingrid & Soretz, Susanne, 2010. "Productive public input, integration and agglomeration," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 538-549, November.

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