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Public Expenditure and International Specialisation

Marius Brülhart and Federico Trionfetti

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: We study the impact of home-biased public expenditure on international specialisation in general equilibrium models with increasing returns and monopolistic competition. It is found that home-biased procurement attracts increasing-returns industries to the home country (the "pull" effect) and attenuates the overall degree of industrial specialisation (the "spread" effect). Empirical evidence based on input-output data for the European Union confirms the existence of these links between public expenditure and the location of manufacturing activities.

Keywords: public expenditure; international specialisation; economic geography; European Union; input-output analysis (search for similar items in EconPapers)
JEL-codes: F1 H5 R15 R3 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2000-09
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Published in European Economic Review, vol. 48 (4), August 2004, pp. 851-881
Forthcoming in European Economic Review, 2004

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Related works:
Working Paper: Public Expenditure and International Specialisation (2001) Downloads
Working Paper: Public expenditure and international specialisation (2001) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:00.23

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