MACROECONOMIC EFFECTS FROM THE REGIONAL ALLOCATION OF PUBLIC CAPITAL FORMATION

Jaime Alonso-Carrera (), Maria Jesus Freire-Seren () and Baltasar Manzano ()

CAMA Working Papers from Australian National University, Centre for Applied Macroeconomic Analysis

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 other based of an efficiency criterion.

JEL-codes: E62 H20 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-geo, nep-mac and nep-ure
Date: Written 2008-05
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