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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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    Cited by:

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

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